Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — WALES

Steel Industry

Mr. Barry Jones: asked the Secretary of State for Wales what further consultations he has had with the British Steel Corporation in the light of the new public spending criteria.

The Secretary of State for Wales (Mr. Peter Thomas): I maintain close contact with the corporation on all aspects of its work in Wales.

Mr. Jones: Will the right hon. and learned Gentleman make new and urgent representations on behalf of continued steel-making at Shotton? Will he, for instance, visit the works?

Mr. Thomas: As the hon. Gentleman knows, the Government have carried out a thorough examination of the British Steel Corporation's development proposals and were satisfied that they offered the best means of securing the future for the steel industry. That remains the position.

Mr. Roy Hughes: Does the right hon. and learned Gentleman agree that, although the Government were satisfied regarding tube production capacity and therefore closed the Newport works, there is now a tube shortage? Perhaps the judgment of the corporation ought to be considered by the Government.

Mr. Thomas: The British Steel Corporation's strategy went into great detail and it was considered that for the long-term future of the steel industry it was the proper strategy.

Rent Scrutiny Boards

Mr. McBride: asked the Secretary of State for Wales what further consideration he has given to the composition of rent scrutiny boards in Wales.

Mr. Peter Thomas: This is a matter for the President of the Rent Assessment Panel for Wales.

Mr. McBride: As the Secretary of State has executive responsibility for housing in Wales, will he now exclude the professional members from the rent scrutiny boards in favour of the expertise possessed by democratically-elected people? Does he agree that there ought to be a right of appeal from the arbitrary decisions of these rubber-stamping servile bodies so as to give natural justice to 280,000 council house tenants in Wales?

Mr. Thomas: It is the responsibility of the President of the Rent Assessment Panel for Wales to make appointments to rent scrutiny boards from the membership of the panel. I cannot intervene in this. The scrutiny boards are completely independent bodies and I am satisfied that appointments in Wales meet that requirement.

Road Programme

Sir A. Meyer: asked the Secretary of State for Wales what effect the recently announced cuts in Government expenditure will have on the road-building programme in North Wales.

Mr. Peter Thomas: The start of work on some trunk road projects may have to be deferred. Local highway authorities are considering the measures necessary to achieve the required reduction in expenditure on other roads.

Sir A. Meyer: Is my right hon. and learned Friend aware that there is real anxiety in North Wales that the already inadequate trunk road programme may be further set back as a result of the cuts in Government expenditure? Will he fight like a tiger for its young to protect this ailing programme?

Mr. Thomas: My hon. Friend will appreciate that we in Wales will have to take our fair share of the cuts which are proposed. The cuts proposed for


Wales are only a fair share of the total cuts. We are not being asked to take any more cuts beyond that. I assure my hon. Friend that by regulating the starting dates on schemes I shall seek to give the highest priority I can to the A55 improvement.

Mr. Cledwyn Hughes: Will the right hon. and learned Gentleman be a little more specific? Does the reduction in public expenditure announced by the Chancellor of the Exchequer mean that grants towards roads in North Wales and elsewhere will be down by 10 per cent. in 1974–75? The Secretary of State has accepted that the A55 in North Wales is very important. How will the improvements to the A55 and the bypass on both sides of the proposed new road span over the Menai Bridge be affected?

Mr. Thomas: It is too early to say precisely which schemes will be affected, but certain schemes will clearly have to be deferred.

Mr. Hughes: What about the 10 per cent. reduction?

Mr. Elystan Morgan: Will the Secretary of State take note of the exceptional needs of Cardiganshire? Does he appreciate that the amount spent per mile on trunk and principal roads in Cardiganshire is very much below the average for the adjoining counties? Will he pay particular attention to the contribution which road improvements can make to strengthening the county's economy?

Mr. Thomas: I agree that these matters are important for Cardiganshire, in the same way that road works are important for most parts of Wales. Local authorities will take these matters into account in assessing priorities.

Mr. Barry Jones: In this context, can the Secretary of State indicate when he expects to make a statement on the forces in Wales with reference to road works, particularly the Queen roundabout and the Ha warden bypass?

Mr. Thomas: I hope to make an announcement on the task force very soon. Many matters have to be considered afresh in relation to the task force and these matters will be considered as early as possible.

Mr. Hughes: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of those replies, I beg leave to give notice that I shall seek to raise this matter on the Adjournment.

Middletown Hill (Quarrying)

Mr. Hooson: asked the Secretary of State for Wales if he will call in for public inquiry the decision of the Montgomeryshire Planning Authority to allow quarrying to proceed under certain conditions on Middletown Hill.

Mr. Peter Thomas: No, Sir. Applications can be called in only where they have not already been decided.

Mr. Hooson: Surely a remedy must be available when a decision has been made which has greatly disturbed the inhabitants of this village, who live only 200 yards away from and below the site of the quarry. Is there not a means whereby the Minister can influence this decision or at least call it in for some kind of public inquiry?

Mr. Thomas: I cannot call it in once the determination has been made. There are certain remedies, but they are extreme ones and it would be an extreme matter for me to override a local planning authority's judgment on a purely local matter. Having considered this matter, I have reached the conclusion that it does not have wider implications than those of local significance. For that reason I cannot intervene.

Brecon and Radnor

Mr. Roderick: asked the Secretary of State for Wales how much of the public expenditure cuts announced in December will apply to the counties of Brecon and Radnor.

Mr. Peter Thomas: It is not possible to forecast how much of the public expenditure cuts will apply to any particular part of Wales since much will depend on what schemes are put to me for approval by the authorities concerned.

Mr. Roderick: Does the Secretary of State agree that there has been a cut in these counties, however much it may be, and that since his Government have been in power there has been a continuous shift of emphasis in that local authorities have been obliged to find more and more of their income? Can we expect a further


announcement on cuts in public expenditure in view of today's announcement of the balance of trade figures?

Mr. Thomas: Since the Government have been in power local authorities have spent very much more than at any other time in their history. As I said earlier, we in Wales must take a fair share of the proposed cuts, but I am happy to say that we are required to take only a fair share of the reduction.

Mr. Cledwyn Hughes: What is this fair share to be? Will the Secretary of State answer my previouns question? Is there to be a cut of 10 per cent. in the overall expenditure on roads in Wales in the financial year 1974–75? Will the Secretary of State please reply?

Mr. Thomas: The figures for 1974–75 on reduction of capital expenditure on roads in Wales amount to £9·8 million. On procurement of roads the reduction will be £1·8 million.

Llantrisant New Town

Mr. Probert: asked the Secretary of State for Wales whether he will make a statement on the proposed Llantrisant new town.

Mr. Peter Thomas: I expect to announce my decision soon.

Mr. Probert: In view of the tragic cuts in public expenditure announced by the Government, some effects of which have been referred to in previous Questions, would it not be much better for the people of Wales if the expenditure which will be required for the starting of this proposed new town were to be allocated to local authorities to overcome some of those effects, and certainly if some of it were to be allocated to meet much-needed improvements in the valley communities?

Mr. Thomas: The hon. Gentleman will not expect me to make any comment on this matter in advance of a decision being announced.

Mr. John: Is not the failure to make a decision on this and related matters of the sewage works and the line of the M4 becoming a public scandal? Does not the right hon. and learned Gentleman realise that sewerage facilities in the Llantrisant area are grossly inadequate to cover the amount of housing which has been built and the amount of industry

which has moved into the area? Will he accelerate a decision on this matter?

Mr. Thomas: I shall be announcing my decision on the proposed sewage disposal works as soon as possible. My decision will probably coincide with the decision on the Llantrisant scheme.

Mr. Rowlands: As the Secretary of State has used the word "soon" so many times, will he tell us how soon is "soon"? He has been sitting on this report for many months. Although he will not disclose the conclusions of the report, will he say, when the public expenditure figures for 1976 are published, what amounts of money will be included for the new town? Did he assume that it would never be built?

Mr. Thomas: I assure the hon. Gentleman that by "soon" I meant soon. I hope to make an announcement within the next fortnight.

Sir R. Gower: Reverting to an earlier Question, may I ask whether it is not a fact that the sorts of aid and grants available under the new town procedure are not readily made available in the same part of the country under alternative forms of grant?

Mr. Thomas: My hon. Friend is, as he so often is, absolutely right. Right hon. and hon. Members opposite quite clearly have failed to appreciate exactly what finance was proposed for the setting up of the new town. A very large amount of this would be private finance.

Education

Mr. Alec Jones: asked the Secretary of State for Wales what representations he has received regarding the effects of the cuts in public expenditure on the education service in Wales.

Mr. Peter Thomas: I received a letter on 18th January from the Rhondda Excepted District of the Glamorgan Education Authority about educational building from now until 1975.

Mr. Jones: As these cuts in public expenditure and education in Wales are a direct result of the Government's failure and are likely to have serious repercussions on the education of our children, would it not be more honest for the Government to indicate how and where these


cuts may be made rather than to shield behind local authorities which are having to carry the blame for the Government?

Mr. Peter Thomas: I agree that local authorities are anxious to have the matter clarified as soon as possible. All local education authorities are at present having consultations with my Department on this very matter. The hon. Gentleman will be happy to know that, despite the deferment of the improvement programme, the range of projects to be undertaken by July 1975 still exceeds those undertaken by the previous administration.

Mr. George Thomas: In view of the very serious effect upon local government services in Wales of the proposed cut in expenditure, will the Secretary of State provide us with a White Paper indicating how he believes that the various services in Wales are to have cuts applied? He has given some very strange replies this afternoon, indicating that he does not know how on earth the cuts are to be applied.

Mr. Peter Thomas: I can certainly let the right hon. Gentleman know the proposed cuts in each of the services. There is a Question down today on this very subject. The right hon. Gentleman will appreciate that this Question relates solely to the education service.

Pontypridd

Mr. John: asked the Secretary of State for Wales whether he will pay an official visit to the Pontypridd constituency.

Mr. Peter Thomas: Yes, Sir.

Mr. John: Will the Secretary of State, when visiting the Pontypridd constituency, take the trouble to visit the mines which are working in the constituency, talk to ordinary miners and go on a tour of the seams such as those working in the Cwm colliery? Having seen the conditions under which ordinary miners live and work and the rates of pay they receive, will he return and knock some sense into the block-headed Cabinet and persuade it to settle the miners' dispute?

Mr. Thomas: The arrangements which I have made to go to the hon. Gentleman's constituency, and of which I will certainly give him advance notice, do not include that type of visit. One thing I do know is that the employment situation

which obtained at the end of last year in the hon. Gentleman's constituency is at the moment in jeopardy by reason of the shortage of energy. I feel sure that the hon. Gentleman must have brought this matter to the notice of those who are engaged in the mining industry in his constituency.

Mr. Kinnock: If the Secretary of State is so concerned about the effects of the energy situation, will he tell us whether he has yet drawn it to the attention of his Cabinet colleagues that their present policy of the three-day week is costing the country about £450 million a week whereas a justifiable wage award to the miners of less than one-tenth of that amount in addition to what they have already asked for would send us back to work in a couple of days? On his experience in Pontypridd, perhaps he will bring that point of view to bear in the Cabinet.

Mr. Thomas: These are matters which are being discussed continually and are being discussed today when my right hon. Friend the Prime Minister meets the leaders of the Trades Union Congress.

Local Government Staff

Sir R. Gower: asked the Secretary of State for Wales how many officers and staffs of the existing Welsh local authorities have been appointed to posts with the new county and district councils in the Principality ; and what is his estimate of the number of Welsh local government officers and staffs who are still seeking such employment.

Mr. Peter Thomas: I regret that this information is not available. However, the staff order, now being drafted, will ensure that all staff employed by existing local authorities on 31st March 1974 will be employed by a new authority on 1st April 1974.

Sir R. Gower: Is my right hon. and learned Friend able to comment on reports that some of the new county councils are finding it impossible to recruit key personnel at the top level? Second, can he comment on the allegation, which has certainly been made to me, that, whereas the redeployment of senior officials is going reasonably well, it is not quite so satisfactory at lower levels?

Mr. Thomas: Specific employment is being arranged only with key officials. As my hon. Friend appreciates, 99 per cent. of people working in local government will be employed under the Act in April 1974 by a new authority. I know that these are matters of great importance to those concerned with local government, and I know also that they appreciate the work done by the staff commission.

Mr. Hooson: Has the Secretary of State made revised estimates of the cost of this reform of local government, since Parkinson's Law is rife in it, and have he and his Cabinet colleagues investigated what contribution it is making to our inflationary position?

Mr. Thomas: It is an important question, and I know that everyone will be anxious for the local authorities to take heed of the need to keep costs down as much as possible.

Schools (Gwent)

Mr. Roy Hughes: asked the Secretary of State for Wales how many new school projects in Gwent will be held back as a result of the Chancellor's restrictions announced on 17th December 1973.

Mr. Peter Thomas: It is not possible to say precisely which improvement projects will be deferred until my Department has completed its consultations with local education authorities.

Mr. Hughes: Does not the Secretary of State agree that, if the maximum grant is not received, there will be a savage blow at the education service in the new county of Gwent, since a great deal more money has to be spent to maintain the existing services? Further, as his Government forced through the local government reform, since they willed the ends they should now will the means by providing the necessary resources.

Mr. Thomas: As the hon. Gentleman knows, it is the starts of major improvement programmes which will be deferred unless local education authorities can justify the inclusion of any particular project in the basic needs category ; and it is this sort of discussion which is now going on. Despite the deferment of the improvement programme for major school building projects, there will still

be £15 million of projects eligible for starts by July 1975, and about £2 million of these are in Gwent.

Mr. McBride: Will the right hon. and learned Gentleman assure me that no school project envisaged or under construction in Swansea will be cancelled or scaled down? Second, will every facility be given to the construction of the Hafod school, the first major school to be built in my constituency in that part of the city since 1903?

Mr. Thomas: The question refers to school building in Gwent. If the hon. Gentleman cares to put down a Question about Swansea, I shall be happy to answer it.

Mr. Elystan Morgan: Has the Secretary of State any policy whatever with regard to the imposition of these cuts? Is it that 10 per cent. will be cut off the budget of every local authority, is it to be in the form of a lottery depending on the date on which schemes come in, or does he propose to delegate the whole matter to senior officials?

Mr. Thomas: Again, if the hon. Gentleman will put down a Question relating to the whole country I shall answer it. Improvements will be deferred unless they can be related to basic needs. This is where the cuts will be found in the education programme, apart from procurement.

Mr. Morgan: But will there be any appreciation of the differential needs of various localities, or will it be a flat-rate cut over the whole of Wales?

Mr. Thomas: The cuts will be flat-rate cuts, both on capital and procurement, throughout the whole of Wales.

Heath Hospital, Cardiff (Access Road)

Mr. Michael Roberts: asked the Secretary of State for Wales what proposals he has received from the Cardiff City Council to provide a new access road to Heath Hospital.

Mr. Peter Thomas: A new access road has been suggested which would connect with the roundabout at the Eastern Avenue—A470 trunk road interchange at Gabalfa.

Mr. Roberts: Is my right hon. and learned Friend aware that it is generally


regarded as a major planning blunder that an adequate access was not provided for the hospital, and is he aware also that urgent consideration and approval of the current Cardiff city proposal would bring relief to a large number of residents in the area, who are growing increasingly dismayed and frustrated?

Mr. Thomas: My hon. Friend knows because I have already written to him on this matter, that I am anxious to be helpful, and I have offered to contribute towards the cost of certain traffic lights. Earlier proposals put forward by the city were open to a number of objections. I am considering the city's present proposals carefully to see how far those objections are overcome.

National Health Service Reorganisation

Mr. Denzil Davies: asked the Secretary of State for Wales what representations he has received from representatives of National Health Service staff in Wales regarding the problems arising from the reorganisation of the administrative structure of the health service ; and what replies he has sent.

Mr. Peter Thomas: I have had letters from staff interests and from hon. Members. Replies have varied according to the nature of the representations. I have at all times urged that staff should be kept fully informed and consulted on all matters that affect them.

Mr. Davies: Does the Secretary of State realise that, despite his desire to keep the staff informed, there is still considerable anxiety among them about their future rôle under the new area health authorities? Will he now give an assurance that a substantial majority of staff will know by the end of this month what their duties and responsibilities will be under the new authorities when constituted?

Mr. Peter Thomas: I appreciate that there is anxiety among the staff. The matter was referred to at some length when the hon. Gentleman wrote to my hon. Friend the Minister of State, and I do not think I can add anything to the somewhat lengthy reply which my hon. Friend gave on 10th January.

Sir A. Meyer: Does my right hon. and learned Friend appreciate that he has still some way to go before he allays

the discontent among many practising doctors in North Wales that they are not being adequately represented on the area health authorities?

Mr. Peter Thomas: I understand that there have been complaints on this matter, but I am satisfied that the medical representation is adequate.

Mr. George Thomas: Is the right hon. and learned Gentleman aware that the morale of National Health Service employees is absolutely at rock level, thanks to the way in which he has handled the reorganisation? Will he show a greater sense of urgency in this matter in trying to restore the morale of people who want to do nothing more than give good public service?

Mr. Peter Thomas: The right hon. Gentleman does not assist by exaggerating. I do not agree that morale is at rock level. I agree that concern has been expressed, but one thing I am very happy about is that the staff commission which has been at work has met very little criticism.

Mr. Hooson: What increase is there in the number of administrative personnel in the new organisation as compared with the old, what will be the increased cost, and have the Cabinet considered what effect this will have on the country's inflationary position?

Mr. Peter Thomas: With notice, I shall be happy to answer that question.

Hospital Services

Mr. Kinnock: asked the Secretary of State for Wales if he is satisfied with the provision of hospital services in West Monmouthshire.

Mr. Peter Thomas: I am satisfied that the Welsh Hospital Board has taken full account of the needs of West Monmouthshire in its planning.

Mr. Kinnock: The Secretary of State must be easily satisfied. It is not the fault of the Welsh Hospital Board that there is no district general hospital in West Monmouthshire ; it is not the fault of the board or the people of my constituency that 7,000 people in the general area of my constituency are waiting for hospital admission and that three or four times that number are waiting for out-patient treatment. The final insult


has come in the form of a circular to general practitioners asking them to refer their patients to a 32-mile round trip for out-patient service at Nevill Hall, Abergavenny. Is the right hon. and learned Gentleman still satisfied?

Mr. Thomas: I said I was satisfied that the Welsh Hospital Board had taken full account of the needs. After 1st April it will fall to the Gwent area health authority in the first place to consider the issues that the hon. Member has mentioned today. I have no doubt that it will take full account of what he has said.

Oral Answers to Questions — TRADE AND INDUSTRY

Regional Employment Premium

Mr. Radice: asked the Secretary of State for Trade and Industry whether he is now in a position to make a statement about the regional employment premium.

The Under-Secretary of State for Trade and Industry (Mr. Anthony Grant): I refer the hon. Gentleman to the answer which my hon. Friend the Chief Secretary gave to the hon. Member for Lanarkshire, North (Mr. John Smith) on 17th January.—[Vol. 867, c. 139.]

Mr. Radice: Does the Minister agree with the conclusion of the Expenditure Committee that the withdrawal of the REP without any comparable replacement would create serious difficulties for many firms? Is he aware that the gap in levels of unemployment between the North and the South will widen as a result of the economic crisis and that, therefore, every kind of regional incentive, including REP, is desperately needed? Is it not about time that, on this as on so many other issues, the Government told the House what they intend to do?

Mr. Grant: My right hon. Friend the Chancellor will announce his decision to the House as soon as possible. We shall certainly lake note of the report of the Trade and Industry Sub-Committee in which I note it is also stated in the conclusions that it is difficult to judge whether or not there could be a more effective way of spending £100 million a year.

Mr. Rost: Will my hon. Friend give an assurance that, before a decision is made, the non-assisted and intermediate

areas will be considered and thought will be given to whether the money could be used more effectively in other ways?

Mr. Grant: My hon. Friend has drawn attention to the fact that there is more than one side to this case. All aspects will be taken into consideration.

Mr. Maclennan: Will the Minister say how the Government propose to take into account the case of Scotland, which at present obtains £40 million of the total? What is proposed to be put in its place in view of the imminent expectation of economic disaster following the last week's happenings?

Mr. Grant: The interests of Scotland, as of other development areas, will be taken into consideration, as will be the national interest.

Mr. Benn: Have the Government considered the matter again in the light of the much worsened situation, the very serious risk that unemployment will rise, the possibility that the prospects of higher investment will not materialise and the effects that these are bound to have on the development areas? If the Government are so willing to look at all their other policies again, will they reconsider the desirability of maintaining REP, which has been shown to contribute to prosperity in areas which would otherwise be bereft of such help?

Mr. Grant: The Government will consider all the factors in the light of present circumstances and will take into consideration the views of the right hon. Member for Cardiff, South-East (Mr. Callaghan) when he was Chancellor, when he recommended that the premium should be phased out after seven years.

Oil Imports (Romania)

Sir J. Langford-Holt: asked the Secretary of State for Trade and Industry, in view of the shortage of oil supplies, why, on 11th December 1973, he refused an import licence for 4,000 tons of lubricating oil which can be supplied from Romania subject only to his consent.

The Minister for Trade and Consumer Affairs (Sir Geoffrey Howe): The embargo on oil imports from Romania is being maintained pending agreement on an appropriate level of compensation for the nationalisation of British assets in 1948 and other claims.

Sir J. Langford-Holt: Will my right hon. and learned Friend say how long this is to go on? As far as I know, every Eastern European Government has refused to honour such investment and commercial liabilities and similar claims but we readily trade with them. Why single out Romania?

Sir G. Howe: We have been pressing for a settlement with Romania for many years. Two rounds of negotiations were held in 1973 and the discussions have now been adjourned. However, there is some reason to hope—I say this in the light of my hon. Friend's observations—that the Romanian Government will shortly make a satisfactory offer of settlement.

Mr. Skeet: Is my right hon. and learned Friend aware that assets to the total value of £40 million remain unpaid for by Romania?

Sir G. Howe: I am very much aware of that. It is one of the reasons why we do not cast away the prospect of a successful negotiation.

Lonrho (Inquiry)

Mr. Meacher: asked the Secretary of State for Trade and Industry if he will reconsider the terms of reference of the inquiry into Lonrho and extend them.

Sir G. Howe: The inspectors' terms of reference are determined only by the statutory powers under which they are appointed. No limit has been placed upon the scope of their inquiries.

Mr. Meacher: Will this inquiry publicly disclose in full the complex manoeuvres by which Lonhro or certain directors of it tried to corner for themselves the vast profits arising from a major Rhodesian copper strike at the Inyati mine, first by transferring ownership to a shell company in South Africa, secondly by trying to buy out cheaply minority shareholders by concealing the true size of the windfall gain, and thirdly by transfer pricing between subsidiaries abroad? How will the Companies Bill stop this kind of greedy expropriation by unscrupulous multi-nationals?

Sir G. Howe: In his supplementary question the hon. Member has used seven or eight intemperate nouns or epithets by way of launching into the allegations he has made. I have already written to him

answering his detailed letter telling him that all the matters to which he has referred will be looked at by the inspectors, and inviting him, if he is in possession of as much information as he appears to be, to proffer documents to the inspectors who will be glad to hear from him.

RB211 Engine

Mr. Walter Johnson: asked the Secretary of State for Trade and Industry what progress is being made with the developments of the RB211-524 Rolls-Royce engine ; and what arrangements have been made for sharing the launching costs.

Mr. Tebbit: asked the Secretary of State for Trade and Industry what requests he has had for further Government support in the development of the RB211 family of engines ; and what replies he has given.

The Under-Secretary of State for Trade and Industry (Mr. Cranley Onslow): My hon. Friend the Minister for Aerospace informed the House on 13th December of the Government's position in relation to the development of the RB211 engine to 48,000 lb. thrust. We are in continuing touch with the manufacturers and as soon as further decisions are taken my hon. Friend will of course report them to the House.—[Vol. 866, c. 170–1.]

Mr. Johnson: Will the Minister give an assurance that the development and launching of the up-rated version of the RB211 will not be held back through lack of funds? Will he join me in condemning those sections of the Press which have been scaremongering about the prospects of TriStar and the RB211?

Mr. Onslow: I shall certainly join with the hon. Member in condemning scaremongering speculation. I can assure him that we are in the closest contact with the company and that we wish to see this project succeed.

Mr. Tebbit: Have any approaches been made concerning development up to the -25 standard, the 55,000-1b. engine, and the -80 standard, the 30,000-1b. thrust engine? Are these likely goers in the near future?

Mr. Onslow: No such proposals have been put to us by the company, which is concentrating on the 48,000-1b. version which is adequate for its purposes.

Mr. Millan: What recent discussions have the Government had with Lockheed, for example during Mr. Haughton's recent visit to London, and what reassurance can the Government give Rolls-Royce and the workers that the project has a long-term future?

Mr. Onslow: As the hon. Member may know, my hon. Friend the Minister for Aerospace had a meeting on 18th January with Mr. Haughton, who advised him of the latest situation. There is, of course, a close connection between this version of the RB211 and the stretched version of the Lockheed 1011. We understand that Lockheed has decided to defer launching of the -2 for the time being but it has informed us of no decision to abandon the project and it has indicated that it is considering alternative plans to provide a long-range version of the 1011.

Mr. Wilkinson: Does my hon. Friend foresee any other aircraft in which an up-rated version of the RB211 could be installed? Will he look into the possibility not only of installing the engine into the European airbus but also of selling the engine to the Russians and the Chinese?

Mr. Onslow: These are essentially matters for the manufacturers, who no doubt are alive to the possibilities not only of the European airbus but also of the Boeing 747.

Mr. Bishop: Since the Minister says that his hon. Friend has seen Dan Haughton about the situation, will he be more forthcoming concerning the discussions which took place and the prospects? Is the Minister aware that it is estimated by Dan Haughton that about 56 TriStars are equivalent in use to 100 Boeing 707s at two-thirds of the fuel consumption? On these prospects of significant energy savings, which will of course enhance prospects for the TriStar family, will the Minister assure the House that talks are taking place to ensure the financial viability of Lockheed, since it is no good having a family of RB211 engines without a family of aircraft in which to put them?

Mr. Onslow: The hon. Gentleman would not expect me to go into great detail about conversations between my hon. Friend and Mr. Haughton, but I

have told the House that if decisions are taken my hon. Friend will make a statement. There is no greater believer in the aircraft than Mr. Haughton, and he is a most powerful advocate for it. The question of the financial stability of the Lockheed company is not one for me to comment on.

Fife (Employment)

Mr. William Hamilton: asked the Secretary of State for Trade and Industry how many new jobs have been created in Fife in each of the last five years ; how many were for men and how many for women ; and how many jobs were lost in the same period.

Mr. Anthony Grant: The information is not available. However, unemployment was 900 lower at the end of 1973 compared with five years previously.

Mr. Hamilton: Why is not the information available? How can the Minister judge the effectiveness of the working of the Industry Act if he does not have figures such as those requested in the Question? The new town of Glenrothes is, I think, the only town in Scotland without a public service authority building in which office workers are employed. Will he have regard to that when the Government are deciding the distribution of the offices of the new Energy Department?

Mr. Grant: The figures are not available in the form requested because they were previously obtained from industrial development certificate applications, and the need for IDCs was abolished in 1972. However, we hope that it will be possible to obtain more information from planning applications. Certainly we want to have in the hon. Gentleman's area the widest possible diversity of industry and commerce. I shall take careful note of what he says about Glenrothes, but I am fortified by the remarks of the Convener of Fife County Council, writing about Fife only last week, when he said:
At no time in its history has the industrial and commercial mix of the county been better, nor its sophistication more widely spread.

Travel and Holiday Trade

Mr. McCrindle: asked the Secretary of State for Trade and Industry whether he has plans to meet the Association of British Travel Agents and the Tour


Operators Council to discuss the 1974 holiday season.

Sir G. Howe: I have already had discussions with the Association of British Travel Agents about its trading arrangements.

Mr. McCrindle: Has my right hon. and learned Friend noticed that this year many people who would normally have been making holiday bookings are hesitant about doing so in view of the possibility that the travel tours for which they are booking might not go ahead? Has he noticed that this has led to difficulty in some parts of the travel trade? Is the future oil supply position such that my right hon. and learned Friend can now engage in discussions with the travel trade with a view to giving it an indication of how much oil is likely to be forthcoming in the summer months for charter holiday flights?

Sir G. Howe: The travel trade is as aware as anyone else of the possible difficulties arising from the oil supply shortages. My hon. Friend the Under-Secretary will be keeping in touch with it about that.

Mr. Ewing: In the Minister's discussions with the travel tour operators, was there mention of the fact that operators do not seem to be telling holidaymakers that people travelling from this country to other Common Market countries are not required to cover themselves for sickness and treatment in hospital?

Sir G. Howe: I shall certainly pay attention to the point made by the hon. Gentleman.

Mr. Alan Williams: Is the Minister aware that many travel agents are already so worried that there have been dismissals of staff? Does he recognise that when, after today's trade figures, a new Draconian Budget is introduced, there will inevitably be a risk of increases in bankruptcies among travel agents? In those circumstances, what further action does the Minister contemplate to protect members of the public who have booked and paid well in advance, in the event of travel agents encountering difficulties?

Sir G. Howe: I do not take the same alarmist view of the situation as the hon. Gentleman does. The prospect of financial failure is one of the matters that has

been under discussion in the past with the association.

General Agreement on Tariffs and Trade

Mr. Moate: asked the Secretary of State for Trade and Industry if he will make a statement on progress in the GATT negotiations.

Sir G. Howe: Following the official opening of the multilateral trade negotiations in September last year in Tokyo, the Trade Negotiations Committee, which was set up then by Ministers, held its first meeting in Geneva in October. Discussion since then has centred on the most appropriate structure for the preparatory work and for the negotiations proper. These can begin once the United States Trade Reform Bill, which gives the United States its negotiating authority, has been passed.

Mr. Moate: Recognising the general background difficulties, may I ask my right hon. and learned Friend whether he can confirm that it is the Government's intention to give every possible backing to maintaining the momentum of the talks? In view of the disintegration of Common Market policies on economic and monetary union, and virtually everything else, can he confirm that the Common Market negotiating position in GATT is likely to remain intact?

Sir G. Howe: While not accepting my hon. Friend's premise, I entirely agree with him about the importance of pressing ahead with the negotiations.

Mr. Benn: Will not the right hon. and learned Gentleman take seriously what his hon. Friend said? The French float and the effect it is bound to have on the common agricultural policy make it absurd that the British Government should have accepted a negotiating position that excluded discussion of common agricultural policy matters. Will he not wake up to the reality that economic and monetary union and the moves towards it, together with many of the other ideas aired at the Summit meeting in November 1972, have broken down and that the Government should respond accordingly?

Sir G. Howe: It is far too early to jump to the kind of conclusions to which


the right hon. Gentleman is jumping—[HON. MEMBERS: "Jumping?"]—to jump, float or move in whatever manner the right hon. Gentleman is most accustomed to. It is equally wrong to conclude that agriculture has been excluded from the negotiations to the extent the right hon. Gentleman suggests.

Mr. Biffen: Does the negotiating position to which the British Government are committed assume economic and monetary union by 1980? Is it my right hon. and learned Friend's view that that assumption is likely to be validated?

Sir G. Howe: The Government's negotiating position is arrived at in the context of the European Economic Community and other treaty obligations as they now stand.

Government Chemist

Dr. John A. Cunningham: asked the Secretary of State for Trade and Industry whether he is now in a position to announce a decision on the relocation of the Laboratory of the Government Chemist ; and if he will make a statement.

Mr. Onslow: Not yet, Sir.

Dr. Cunningham: In view of the Secretary of State's assurance to the House during the debate on the Hardman Report that this relocation was being given serious consideration, will the hon. Gentleman now assure me that the remoteness of Cumberland will not be given by his Department as an excuse for siting the laboratory elsewhere? Does he not realise that, if the Government's stated intentions about industrial development in the area are to mean anything, they should set an example to industrialists by sending a Government Department to it? If they do not, their statements about industrial development there will sound rather hollow.

Mr. Onslow: Without going into the hon. Gentleman's general point, I acknowledge that he has put the case for West Cumberland very fully in his meetings with my hon. Friend the Member for Harrow, Central (Mr. Anthony Grant). I hope he will also recognise, however, that any decision, if it is to be right, must take into account the special operational requirements of the laboratory, which provides

a unique advisory and experimental service, the needs of client Departments and the views of the staff and all other interested parties.

West London Air Terminal

Mr. Bishop: asked the Secretary of State for Trade and Industry what recent discussions he has had with British Airways regarding the continuation of facilities at West London Air Terminal.

Mr. Onslow: My hon. Friend the Minister for Aerospace and Shipping wrote to the British Airways Board on 21st December to draw its attention to the motion on this subject approved in another place the previous day. The board accordingly considered at its meeting of 28th December whether it should defer the proposed withdrawal of the check-in facilities at the terminal, but it concluded that there was a compelling case for bringing the new arrangements at the terminal into operation as planned on 1st January.

Mr. Bishop: Is the Minister aware that among the reasons given by British Airways for the closure of the check-in facilities were the facts that more people were using private cars to get to London Airport and that the coaches used to convey passengers were often delayed, thus holding up flights? In view of the changed fuel situation, those two reasons are no longer valid. Is the hon. Gentleman aware of the concern expressed in another place, where the vote went overwhelmingly against the proposal to make a change? How much money does British Airways hope to save by the change? Is there any estimate of the cost to the public in missed flights and so on as a result of flights leaving earlier than they would normally leave? Will the Minister assure the House that he will have further discussions with British Airways to convey to it the feeling of both Houses on the matter?

Mr. Onslow: I am not sure whether the hon. Gentleman is right when he speaks of the feeling of both Houses. It is true that my original reply took note of the fact that the other place had taken, as it was entitled to do, a view on this matter. That view does not necessarily bind this House.
The hon. Gentleman might like to know that the arrangements have been working for only three weeks, and


it is, of course, too early to draw any firm conclusions. There is little evidence of complaints from passengers. There is some evidence that the number of passengers using the terminal has increased. We are keeping a close watch on the situation. I hope very much that the hon. Gentleman will feel inclined to let the results speak for themselves.

Mr. Geoffrey Finsberg: Is my hon. Friend aware that there is strong feeling on both sides of the House that British Airways has been insensitive to consumer demand? Will he confirm that it is losing over £500,000 a year revenue which it no longer gets from foreign airlines which have been denied check-in facilities at West London?

Mr. Onslow: This is essentially a commercial matter which is the responsibility of the British Airways Board. Parliament has not given my right hon. Friend a power of direction which could apply in such a case. It is generally the wish of the House that nationalised industries should, so far as possible, be left free to decide these matters for themselves as best they can and meet the needs of their customers.

Small Firms (Working Week)

Mr. Biffen: asked the Secretary of State for Trade and Industry if he will make a statement on the impact of the three-day working on smaller businesses.

Mr. Kinnock: asked the Secretary of State for Trade and Industry what representations he has received from organisations representing small firms on the effects of three-day working.

Mr. Anthony Grant: At my request, I have had meetings with the CBI Small Firms Council, the Smaller Businesses Association, the Association of British Chambers of Commerce and the National Chamber of Trade. Although the present situation poses serious problems for small firms as well as large, my information is that the majority of small firms are coping well, with a high degree of co-operation between employers and employees. I am naturally watching the position closely and maintaining direct contact with the sector.

Mr. Biffen: What representations has my hon. Friend received concerning the

financial problems which are likely to arise for the whole of industry, and especially smaller firms, if the three-day working week persists for a long time?

Mr. Grant: Naturally the representatives of the small firms whom I saw were concerned about the problems of future cash flow. They made their points on that basis. They hoped that the banks and financial institutions would be as sympathetic as possible. I have no doubt that that will be the case.

Mr. Kinnock: Will the Minister accept that, contrary to his experience, a lot of small firms are outraged at the administrative chaos which appears to reign in the regional centres of the Department of Trade and Industry? I accept that members of the Department must not bear the blame for that since it must lie with the regulations which they have to apply. Does he appreciate that small firms are fed up with the way in which responsibility is being shuffled off by the regional electricity boards? Does he accept that there is a growing feeling, at least in South Wales, about the enormous disparity of treatment regarding applications and appeals from employers in different regions? Is he aware that some firms in similar areas and with similar demands to others are receiving much smaller allowances of electricity?

Mr. Grant: The hon. Gentleman's information from firms in Wales is not the same as that which has been supplied to me by various organisations with which I have spoken, which had considerable praise for the way in which the regional offices were coping with a difficult situation. We shall consider carefully the difficulties which they are experiencing. By and large, the organisations are in complete support of the Government's counter-inflation measures and there is a remarkable degree of co-operation between both sides of industry. In that respect I pay tribute to them.

Mr. Wyn Roberts: Will my hon. Friend consider introducing a rotational system for the three-day working week? Does he accept that firms working at the end of the week are clearly at a disadvantage compared with their competitors which are working at the beginning of the week?

Mr. Grant: That matter was discussed with my right hon. and noble Friend the Secretary of State for Energy. He will no doubt give full consideration to the views which were then expressed.

Mr. Ford: Is the hon. Gentleman aware that Lucas Aerospace, one of the smaller companies in its type of business, declared a substantial redundancy over the weekend which it attributed to Government policy? Would the hon. Gentleman accept that as a valid reason for declaring redundancy at this stage?

Mr. Grant: I cannot now comment on the case which the hon. Gentleman has mentioned. Happily, that has not happened in many firms, but I will gladly consider the case in the hon. Gentleman's constituency.

Mr. Alan Williams: Will the hon. Gentleman bear in mind that, as a result of the utterly unnecessary retreat into a three-day working week, many small firms are facing not only critical but crippling cash flow problems resulting in part from the failure of the larger firms to pay their smaller suppliers? What urgent action do the Government intend to take to ease the cash flow situation? Will they consider allowing extra time for the payment of the January value added tax demand and introducing staged payments for partially completed contracts in the public sector?

Mr. Grant: Those points have been referred to the Government and are being considered. My right hon. Friend the Chancellor of the Exchequer must consider them as well and will announce in due course what we can do. The Government are naturally watching the cash flow situation very closely and will wish to ensure that the banks have sufficient liquidity to meet the reasonable needs of industry. However, undoubtedly the best contribution which could be made towards solving the difficulties of small firms would be a return to full-time working by the miners and railwaymen.

Oral Answers to Questions — SMALL CLAIMS ARBITRATION

Mr. Clinton Davis: asked the Attorney-General if he will make a statement concerning the operation of the small claims arbitration procedure in the county courts.

Mrs. Sally Oppenheim: asked the Attorney-General how many small claims have been brought under the small claims arbitration provisions in the county courts since their inception.

The Attorney-General (Sir Peter Rawlinson): During the first three months of the operation of the arbitration scheme to 28th December, 1973, 426 cases were referred for arbitration by the court and 137 of these were disposed of. In many other cases requests for arbitration are made by plaintiffs or defendants but do not fall to be considered because a default judgment is obtained or the case is disposed of summarily on a pre-trial review.

Mr. Davis: I thank the Attorney-General for those figures. Is he aware that there are complaints which fall into three categories about the initial operation of the scheme? The first is that some courts are applying the rules of evidence too rigidly and too formally. Secondly, it is complained that some people who wish to go to arbitration under the scheme are not given the requisite attention in certain courts and court offices. The third complaint is that some courts are refusing to operate the scheme.

The Attorney-General: I shall bear in mind the points which the hon. Gentleman has raised and I shall pass them on to my right hon. and learned Friend the Lord Chancellor. I have not heard of the last of the three points which the hon. Gentleman has raised. If he is prepared to give me particulars, I shall see that they are examined.

Mrs. Oppenheim: Does my right hon. and learned Friend accept that the numbers are disappointingly low? Does it not appear that an insufficient number of people are availing themselves of the scheme? Will he say at what point he will draw any conclusions as to whether the scheme is a success so that my right hon. and learned Friend the Minister for Trade and Consumer Affairs can consider an alternative method of small claims arbitration?

The Attorney-General: I share my hon. Friend's disappointment, perhaps, about the numbers. There was some difficulty about publicity in that the Stationery Office booklet was delayed until the end of October. My right hon. and learned Friend the Lord Chancellor


is being supplied with the figures and is receiving a sample based on the monthly reports. He then proposes to hold a conference of registrars to discuss and examine the position. I shall bear in mind what my hon. Friend has said.

Mr. S. C. Silkin: The Attorney-General referred to the Stationery Office booklet which was delayed to some extent. What steps have been taken to ensure that the booklet is disseminated to all those who might make use of this procedure so that they are aware that it exists?

The Attorney-General: One proposal which has been put forward is that in appropriate cases hon. Members might care to mention the scheme to their constituents and give them an explanatory leaflet when they attend their surgeries. I think that that suggestion would be useful and I shall see that it is carried out.

Oral Answers to Questions — COURT PROCEEDINGS (REPORTING)

Mr. Milne: asked the Attorney-General if he will introduce legislation to clarify the law of contempt of court in relation to the reporting of proceedings.

The Attorney-General: This matter is being considered by the Phillimore Committee on the law of contempt of court.

Mr. Milne: Is the right hon. and learned Gentleman aware that only the full reporting of court proceedings gives meaning to the public character of justice in this country, and that, provided the report of a trial is fair and accurate and is published in good faith, it cannot and should not be regarded as contempt of court. In view of the interlocking nature of cases which are appearing before the courts and those which are due to come before the courts, will the Attorney-General prevail upon his right hon. Friend the Prime Minister to consider setting up a Royal Commission on this subject? Will he consider establishing such a commission arising from the Poulson trial?

The Attorney-General: The Phillimore Committee is examining the question of contempt of court. What the hon. Gentleman has said must clearly be borne in mind. There is some feeling about this matter and the Press Council in particular has asked for the opportunity, even

at this late stage, to give further evidence to the Phillimore Committee. That it is doing on 26th January.

Sir Elwyn Jones: Will the right hon. and learned Gentleman indicate when it is hoped that the committee's report will be received? The House will appreciate the unfortunate circumstances of a personal character which have caused delay. However, the matter has been lying about for a long time. Will the right hon. and learned Gentleman give an indication of when we may hope to receive the report?

The Attorney-General: It is hoped, despite the fact that the Press Council has asked for the opportunity to give further evidence on 26th January, that the committee will present its report to my right hon. and learned Friend the Lord Chancellor and to my right hon. and learned Friend the Lord Advocate in March.

MIDDLE EAST (DISENGAGEMENT AGREEMENT)

The Secretary of State for Foreign and Commonwealth Affairs (Sir Alec Douglas-Home): With your permission, Mr. Speaker, and that of the House, I will make a statement on the Middle East.
Despite the cease-fire agreement, the Egyptian and Israeli armies have remained in close contact and precariously interlocked. This dangerous situation has posed a grave threat to the ceasefire and has made it impossible for the peace negotiations at Geneva to proceed to the issues involved in a permanent settlement.
Honourable Members will therefore have learned with great satisfaction that agreement has now been reached between the Egyptian and Israeli Governments through the good offices of the United States upon the disengagement of the opposing armies and their separation by a substantial zone to the east of the Suez Canal in which the troops of the United Nations Emergency Force will take up their positions. A copy of this agreement has been placed in the Library of the House.
The House will applaud the tireless work which Dr. Kissinger has put into the achievement of this major step towards peace. For that is what it is. I was glad to have the opportunity to


discuss all these matters with Dr. Kissinger early this morning.
The present situation provides an opportunity to establish a permanent settlement of the dispute between Israel and the Arabs. It is an opportunity that must not be missed. Above all, it is essential that the disengagement of the Egyptian and Israeli armies, which we welcome with such relief should be seen not as an end in itself but as a promising starting point which makes it possible to press ahead with negotiations towards a full and permanent peace settlement. Her Majesty's Government remain ready to help through the Security Council or in any other appropriate way.
I should add that this latest development obviously has a bearing on the question of the supply of military equipment to the parties to the conflict, about which hon. Members' expressed much concern during the period of the fighting. While the disengagement agreement is far from being a guarantee of lasting peace, it will certainly reduce drastically the dangers of military confrontation, and the Government have decided accordingly that we need no longer continue to suspend delivery of the military supplies to the battlefield countries which we held up when the fighting broke out on 6th October. We will, of course, continue to scrutinise any future requests with the same care and against the same criteria as we have consistently applied in the past.
I hope that all concerned will now use this hard-won agreement as a foundation on which to build the durable peace that has for so long been denied to the peoples and countries of the Middle East.

Mr. Callaghan: The House will welcome the Foreign Secretary's statement, in which he very properly paid tribute to the tireless work of Dr. Kissinger. I am sure that right hon. and hon. Members are united in supporting what the right hon. Gentleman said about that matter. May I take this opportunity of saying, I hope on behalf of everybody in the House, that we welcome the constructive approach of President Sadat to the negotiations and the realism of the Israeli Labour Government of Mrs. Golda Meir, because without either of them Dr. Kissinger's work could not have succeeded.
I echo the Foreign Secretary's statement that this is no more than a promising starting point when one remembers that what lies ahead are negotiations about the Palestinians' future, secure borders, Jerusalem and the Suez Canal. Has the right hon. Gentleman any information about the Suez Canal, which seems to be one of the least controversial points?
Turning to the question of arms, this has not been a very glorious episode in our history. We have now made a new start, and I do not suppose that anybody is very happy at the prospect of our engaging on releasing arms in such a situation as this. Can the Foreign Secretary tell us which arms supplies will be released? Will it be those which were in the pipeline when the stop was put on, or will fresh applications have to be made by the Governments concerned?
Everyone must have watched with horror the way in which the United States and the USSR poured arms into the Middle East at a most dangerous period. What is the Foreign Secretary's view about any initiative which he can take to secure some form of arms control in the whole area which would involve not only the United States but the USSR, and preferably under the auspices of the United Nations?

Sir Alec Douglas-Home: I echo what the right hon. Gentleman said about Dr. Kissinger. America has the power in this area, and we must realise that, but Dr. Kissinger's personal contribution has been very great. There is, I think, a new realism in the area and President Sadat and Mrs. Meir have played their part. The question of the Suez Canal is not dealt with in this agreement. More items will follow, and I shall put details about them in the Library as they arrive.
The lifting of the arms embargo means that orders in the pipeline can now go forward—in other words, those which we cancelled which were due to go. Where licences were cancelled, we shall, if necessary, accept fresh applications.
I agree with what the right hon. Gentleman said about the question of arms importation into the area. I should like to see an arms rationing system introduced in the Middle East area which was subscribed to by the United States, Russia and other countries. I hope that


that might be part of a general settlement.

Mr. Hugh Fraser: May I add to the praise which has been expressed to Dr. Kissinger? I congratulate my right hon. Friend the Foreign Secretary on the idea, which was put forward very successfully by Sir Anthony Eden at one time, of an agreement being made between the major Powers on the question of arms supplies to the whole area. Sir Anthony Eden was successful in the 1950s when there was control of the amount of arms going to all sides. This is a most important target which should be aimed at, irrespective of any deals which we may wish to do on our own with the Arab Powers. It is important to achieve a balance of armaments such as was achieved in the 1950s as a result of Sir Anthony Eden's activities.

Sir Alec Douglas-Home: I agree. As I said, I hope that that might form part of a complete agreement.

Mr. Russell Johnston: Naturally, we echo the congratulations which have been expressed to Dr. Kissinger—

Mr. Skinner: Speak up. You are not in Strasbourg now.

Mr. Johnston: One of the advantages of being at Strasbourg—

Mr. Skinner: —is the money, £120 a time.

Mr. Johnston: If I may, without interruption, ask a question, may I from this bench echo the compliments already paid to Dr. Kissinger on the important and successful result that he has achieved? Will the Foreign Secretary say something more about arms? It seems to be contradictory, that the very first step we take in a new and, as he said, promising situation is to announce the recommencement of the sale of arms. I do not quite understand what are the commitments. I understand the responsibility the Government feel for the commitments they have already entered into, but what attitude will they adopt towards new requests for arms?

Sir Alec Douglas-Home: Arms which we contracted to supply and which were ready for shipment can now be sent. We are in complete control of requests for new arms under our licensing system. We

shall use the criteria we had before, that is to say, broadly speaking, we shall not supply arms that could escalate the danger of war in the area. If there is to be a complete agreement, everyone must be a party to it, and we shall work towards that.

Mr. Walters: When my right hon. Friend saw Dr. Kissinger and congratulated him on his achievement of disengagement on the basis that it will lead speedily to a lasting peace, did he also point out to him that it would be a mistake for the Americans to believe that they can pursue policies in the Middle East without the advice and support of Britain and Europe?

Sir Alec Douglas-Home: Dr. Kissinger has been assiduous in keeping us informed all the way through, and asking for our comments on the action he was taking. I have no doubt that he has kept in close touch with our European allies.

Mr. Frank Allaun: Instead of rationing arms to both sides, would not the next step to peace be to get America, Russia and France completely to ban all arms supplies to both sides? Does the Foreign Secretary agree that, whilst the export of British machinery to the Arab countries is welcomed, the supply of arms, for obvious reasons, is not?

Sir Alec Douglas-Home: The hon. Gentleman is a bit optimistic if he thinks that we can go straight to a ban on the supply of all arms. I find it difficult to believe that the Soviet Union would contemplate that. Nevertheless, we can try to make progress in that direction. If the hon. Gentleman is thinking in terms of any deals between this country and Arab or Gulf countries. I assure him that we have not linked the supply of oil with arms.

Mr. Goodhart: Will my right hon. Friend say what representations we have made to the Syrian Government about the fate of Israeli prisoners of war in Syrian hands, as the fate of these prisoners is likely to prove a major stumbling block in the next stage of negotiations about disengagement on the Golan Heights?

Sir Alec Douglas-Home: We have made our position quite clear, that the prisoners should be returned and should not be used in any way as a bargaining


counter in the peace settlement. It is now a matter for discussion between the Israeli Government and the Syrians.

Mr. Faulds: Will the right hon. Gentleman state the Government's present attitude towards Resolution No. 242 which requires the abandonment of occupied territories, as there seems to be no reference to that in the recent agreement?

Sir Alec Douglas-Home: It is proper that the reference in the recent agreement should be to Resolution No. 338 which is concerned with disengagement of the armies. Resolution No. 242 is concerned with the final settlement. As I said in my statement, we hope that this is the first stage towards a final settlement, which must be concerned with Resolution No. 242.

Mr. Mather: Has my right hon. Friend any knowledge of the size of the peacekeeping force that is involved, in particular the size of the Soviet contingent?

Sir Alec Douglas-Home: I had better not speculate on the numbers involved—although I have some ideas—until the rest of the agreement comes out. It is clear that quite a major decision has been taken. For example, I understand that the area occupied by the United Nations forces is to be 10 kilometres wide and on either side of that is to be another 10 kilometres where arms are strictly limited. This is done by agreement between the Israelis and the Egyptians.

Mr. Loughlin: Although I accept that the Foreign Secretary will have extreme difficulty in persuading other nations to cease to supply arms to these countries, does he not accept, in view of the serious danger of a further outbreak of hostilities in this part of the world, that it would be in the best interests of the British people if we said that we at any rate were not prepared to supply arms to either party?

Sir Alec Douglas-Home: We must keep strict control of the arms we supply, but if there is to be a rationing of arms to the area, every country must be a party to that arrangement.

Orders of the Day — SUPPLY

[9TH ALLOTTED DAY]—considered.

Orders of the Day — THE DIVIDED NATION

Mr. Speaker: Before I call for the motion to be moved I should inform the House that I have not selected the amendment standing in the name of the right hon. Member for Devon, North (Mr. Thorpe)—at end add
'and notes that the postures of the Conservative and Labour Parties contribute directly to the division of the nation'.

3.46 p.m.

Mr. Michael Foot: I beg to move,
That this House, recognising that an international energy crisis has come on top of an acute national crisis, condemns Her Majesty's Government for its economic mismanagement which has led to the largest balance of payments deficit in our history, to massive inflation which the Government has done little to check, and to deepening divisions in our society ; and believes that policies of social justice and much greater equality of wealth and incomes are essential to provide the basis on which the country can unite to overcome its economic difficulties.
One of the origins of the motion was the extraordinary events of last week when there was discussion on the possibilities of a General Election. I hope that the House will permit me to make a brief reference to those extraordinary events before I proceed to more sombre matters.
I have never taken the view—at any rate up until the week before last—that the Prime Minister was likely to call an early General Election. The reason why I took that view so strongly was that I thought that for him to do so would be in defiance of his character. I thought that the Prime Minister was not a gambler with the fortunes of the Conservative Party, whatever may be his attitude towards the national finances, and that he had always displayed to us and to the country a misplaced sense of confidence in his ability to deal with the difficulties facing the nation. Therefore, I had always believed that the Prime Minister was likely to retain office almost as long as the parliamentary limit allowed. Indeed, this view was somewhat confirmed


when the Secretary of State for Employment came back from Ulster.
When I was travelling down to my constituency on the Friday before last I was surprised to hear on the radio that Mr. Willie Whitelaw was to take part in the "Any Questions" programme that night. I was the more surprised because I had heard his speech in the previous debate and perceived that he did not know any of the answers. I listened most eagerly later in the evening to hear the right hon. Gentleman and was gratified to hear a familiar voice on the "Any Questions" programme telling us that we should not be at all concerned about the reds under the bed, we should be much more concerned about the Fascists in the bed. Only after I had listened a little longer did I discover that it was not Mr. Willie White-law but Miss Billie Whitelaw. I congratulate her. I thought she made a most powerful contribution to our national debate.
However, I was much shaken on the Sunday before last when most of the newspapers appeared to believe that an election was certain, and when indeed all the popular newspapers agreed with all the correspondents in the posh newspapers I was driven to the extraordinary conclusion that even Miss Nora Beloff had got it right. I was momentarily shaken in my belief that there would be no General Election. And then we had the events of last week. Despite all the prophecies of an early appeal to the polls, it appears that the decision has wavered in the opposite direction.
I am still wondering what may have been the cause of this change. Was it the skilled diplomacy of Mr. Len Murray and the TUC—and I am sure the whole nation pays tribute to them—or was it the timely and kindly intervention of the right hon. Member for Wolverhampton, South-West (Mr. Powell)—and I am sure that part of the nation pays tribute to him—or was it the speech of the Governor of the Bank of England? It is not so easy to deal with him in a General Election. My best suggestion to the Prime Minister—and I hope that my advice will be passed on because it might be useful whenever we get the election—is that he should try drowning him in Lord Rothschild's think-tank, if there is still any room left among those sodden

corpses. I will return to the Governor of the Bank of England in a few moments.
I wish to begin my remarks by dealing with what I regard as the most immediately serious aspect of our situation. I refer to the mining dispute and the prospect of a settlement. I hope that the House will permit me to approach this matter as a representative of a mining constituency and to put to the House the astonishing experience we have had in my constituency in recent months beginning just before the overtime ban. One of the collieries nearest to my constituency is the Ogilvie Colliery, which happens to be in the constituency of my hon. Friend the Member for Caerphilly ("Mr. Fred Evans). Many of my constituents, who live in the village of Abertysswg, work in the Ogilvie Colliery.
For some months past, almost coinciding with the outbreak of the overtime ban dispute, the members of that colliery at NUM lodge meetings have fought to keep their pit open. They have fought with all their strength to put their case to the National Coal Board. They have even subscribed from their not over-generous pay to hire a public relations firm to put their case as strongly as they could, not merely in Wales but in the country as a whole. They held a Press conference to emphasise the need for keeping the mine open. Unfortunately, that conference coincided with the opening of the overtime ban dispute and as a result their campaign was somewhat submerged.
I put this illustration to the House because it shows up the whole national situation. That pit, which the National Coal Board proposes to close, contains millions of pounds worth of coal reserves. I would not like to guess at the value of those reserves now compared with what it was before the Ogilvie Colliery miners began their campaign. I suppose the value has trebled, if not quadrupled. Those miners have been fighting with all their strength to keep the pit open, partly in their own interests and partly, as they believe—and as I think most people would now believe—in the national interest.
Why did the National Coal Board wish to close that pit? There have been losses at the pit over a number of years, but those losses might have looked very different on the balance sheet today when


the possible price of coal is taken into account. It would appear that the National Coal Board wishes to close that pit, despite the huge wealth of coal that still remains in it, because of the necessity by the board to recruit people into neighbouring pits. It is a dramatic illustration of the fact that there is scarcely a pit in South Wales—the same applies to mines in the rest of the country—which is not short of miners and which could not use more miners. One way to put the problem starkly is to underline the fact that 15,000 miners leave the pits every year.

Mrs. Elaine Kellett-Bowman: Would that situation have prevailed if the Labour Government had not subscribed to the policy of allowing miners in the industry to run down by 35,000 a year?

Mr. Foot: I assure the hon. Lady that I shall not try to escape her question, because the feeling of urgency in the mining areas over this matter dates from an earlier period than the incoming of the Conservative Government. I can tell the hon. Lady that when I sat on the Government side of the House, as I did during the period of Labour Government, I put exactly that sort of point. I referred to the years 1966 and 1967. I am not saying that I can claim any particular merit from that, but I am merely saying that I put the NUM's case to the then Labour Government. I put the same case today.
I am now asking the House and the country on this occasion to listen to the NUM and its case a good deal more carefully than its case has been listened to in the past. This is a serious matter and I hope that we shall approach these questions, realising that what the miners are doing today by their overtime ban, despite the difficulties which it causes, is to try to draw attention to what perhaps is our last opportunity to save our coal industry.
I have been seeking to underline how dramatic are the facts and how slender the thread on which the mining industry hangs. It depends on two factors. First, we must get more miners into the pits and, secondly, we must realise that those miners must come overwhelmingly—I might almost say 100 per cent.—from villages such as Abertysswg which I have already mentioned. They will not come from anywhere else.
Therefore, when hon. Members who represent mining constituencies come to this House and report the feelings of people in the areas surrounding these mining villages, this House and the Government should take note of what we say—not just because we say it, but because we bring to this House the views of the people who live in the only communities which can maintain the coal industry in the coming economic decade.
The Secretary of State for Trade and Industry has made speeches on this subject telling of the massive improvement in wages granted by the Conservative Government to miners. He talks almost as though the Wilberforce award had been thought up by Conservative Ministers and that it was one the greatest Conservative triumphs. Those of us who recall the history of that matter know that the situation was somewhat different. The present Prime Minister fiercely attacked the miners on that occasion—almost as fiercely as he now attacks their present overtime ban campaign.
The Secretary of State for Trade and Industry also tries to tell us that in 1972 the Conservative Government introduced the most generous and far-reaching piece of legislation, namely the Coal Industry Bill. It was a good Bill in many respects. It was a much better one than this Government introduced in 1970. So what was the reason for the change between 1970, the Government's first opportunity to introduce a Coal Industry Bill, and 1972? The change was that the Government had learned. There had been a national strike. The national strike of the miners in 1972 performed, I believe, a great service not only to the miners but to the people in Britain today who want coal.
In the same sense I say that the present overtime ban, despite all the difficulties and troubles that it causes, can be the way of teaching this House and the country that the miners have to be treated differently.
When I go up and down my constituency talking to people whose fathers and brothers are miners and whose grandfathers were miners before them, of course they are favourable to the miners. Even though many of them are, as they see it, unnecessarily on a three-day or, they hope now, a four-day week, they say, "The miners have never had


enough. Good luck to them." That is the feeling in industrial Britain. It is not only good for the miners that that should be said. It is wisdom for the country as a whole.
The first duty of any Government in this crisis is to reach an honourable settlement with the miners. It can be done. It is there, available for the country. It need not be done by a capitulation on the part of the Prime Minister, such has been the statesmanship of Mr. Len Murray. He has modelled himself on General Kutusoff, the famous Russian general who always left a golden bridge along which his opponent might escape. Mr. Len Murray has left a golden bridge for the Government to say to the miners, "Yes, we will grant you your increase."
It is a special case. Therefore it can be done without capitulation. Of course it will be a retreat, but it need not acquire Napoleonic proportions unless the dispute goes on even longer than it has already. At any rate, it might teach the Prime Minister not to get his army beleaguered in such remote and wintry places as Moscow again.
The whole nation believes that the first article of wisdom to be learned from these events is that the Prime Minister and the Tory Party should escape from the attempt that they have made to divided the rest of our working people from the miners. It will not succeed. It has been defeated utterly.
I use some of these metaphors about capitulation and retreat because I understand that the Prime Minister is sensitive about the language used in some of our newspapers. He does not like words such as "hawks" and "doves". I suppose that is the reason why the Government have sent along the two right hon. Gentlemen who are to speak from the Treasury Bench in this debate. From the newspapers we do not know whether they are hawks or doves—

Mr. Neil Kinnock: Try "ostriches".

Mr. Foot: I am grateful for that assistance. I cannot detect so clearly from where I am standing. They might be described as a couple of ornithological hermaphrodites—neither one thing nor

the other—though we thought that that rôle was reserved for the Prime Minister. However let them tell us what it is that they are proposing to do to deal with the situation.
As I promised, I come now to the Governor of the Bank of England. One of the objections which the Opposition hold to the way in which the Government have pursued this policy is that, as is clear from the way in which the Prime Minister spoke to the nation at the beginning of the dispute on 22nd November last year, they have caused deepest offence in the mining communities by seeking on television to blame the miners not only for the inconveniences and difficulties resulting from the overtime ban but also for most of the other economic ills of the nation.
The Governor of the Bank of England spoke in a manner which disposed of these matters, and I have summarised what he said, though it is in a slightly different context. I wanted to make sure that all these matters were wound up in one simple proposition. We must remember that the Governor of the Bank of England was speaking about the period before the miners' overtime ban began.
I have put it this way. My summary is headed, "The Problems of Success, by Gordon Richardson, Governor of the Bank of England". That is not how he entitled his speech, but we always like to be sure that the Prime Minister puts his words in this financial context.
One of the problems of success is, "How to accumulate a £2,500 million deficit running rate on the balance of payments without anyone noticing".
Other problems of success are, "How to conceal the fact that the disaster developed before the oil crisis and before the miners' overtime ban. How to prevent anyone realising that the £1,000 million deficit with the Common Market countries has contributed to the fiasco. How to prove that a record £330 million trade deficit in December, with exports falling and imports rising in that figure, is just another Barber-Walker triumph. How to persuade the country that the Budget of 'unparalleled severity' which the Chancellor of the Exchequer is to introduce in March has nothing to do with the previous policies of Her Majesty's Government."
Those are not the exact words of the Governor of the Bank of England. But that is how he would have stated the position if he had been seeking to help the Government out of their difficulties, because that is the way the Government sought to present these economic problems to the nation before the Governor of the Bank of England intervened.
Let me deal with the last proposition—it may be the most relevant and urgent one—of the "unparalleled severity" of the Budget which the Chancellor of the Exchequer will introduce. Those are not my words. They are words which were used in a broadcast on Friday by a most eminent member of the Conservative Party. He was forecasting what would occur. His words were taken up by The Times, which seems to know about these matters.
There are very few people who suggest that it will not be a Budget of "unparalleled severity". If the present Chancellor of the Exchequer is to introduce a Budget, perhaps I might give him a little advice. Indeed, my first advice is to the Prime Minister. It is to get rid of the Chancellor of the Exchequer. It is to send him back to the kitchen of the Conservative Central Office, the spiritual home from which the right hon. Gentleman never really departed, where his half-cooked theories and over-cooked figures may be examined more carefully. My advice to the Prime Minister is to send the right hon. Gentleman back there so that we may have a Chancellor of the Exchequer who presents a Budget to the nation in quite different circumstances.
Everyone knows that the next Budget has to be very different from the one which the Chancellor of the Exchequer presented as recently as last December. What is more, if the Chancellor of the Exchequer were sent to Tory Central Office it might have the added advantage of allowing the Secretary of State for Energy to get on with his job full time. After all, bearing in mind the coal stocks which the part-time Secretary of State has been able to produce, he might be able to do wonders if he were doing the job full time.
But if we are to have a Budget which deals with the problems, it will have to be a Budget which goes to the root of the divisions in our country. It will have

to deal with the question of the rich and the poor, with the basic questions of what has been happening in our country for many decades. I do not say that only this Government have been responsible. It is merely that the actions of this Government in some respects underline these deep cleavages more fiercely than ever before.
Indeed, the action over the three-day week itself has only underlined these class differences. H. G. Wells used to say that the class war was an old pastime of the British ruling classes. So much is this so that they do it almost automatically. The three-day week hits wage earners much harder than salary earners and both much harder than property owners. That is the way in which our society is organised.
What right hon. Gentlemen have been doing during their period of office, in particular during phases 1, 2 and 3—this is why we have said that the policy was not merely unfair but unworkable, and Heaven knows that has been proved clearly enough—is to ensure that it will always work out in this way. Instead of the wage earner being able to improve his position, his position will be held down while that of the dividend drawer, the profiteer, would be enormously enhanced.
Any hon. Gentleman who doubts what I say has only to read the figures in The Times today given by my hon. Friend the Member for Oldham, West (Mr. Meacher)—[HON. MEMBERS: "Oh."] If hon. Gentlemen want to contradict the figures, let them do so, but let them realise that this affects the mining dispute as well. Because of this situation, what the miners are offered by the National Coal Board, even if it were accepted, taking into account the increase in prices which will happen and the extra taxation and insurance that they will have to pay, is only an inconsiderable increase. If it is argued that the offer is in some respects more than some other workers have been offered, that is merely an illustration of what my hon. Friend the Member for Oldham, West has been pointing out persistently without any effective contradiction—that phases 1, 2 and 3 envisage a decline, a cut, in the standard of life of the bulk of working people.
It is against that picture that a Budget of unparalleled ferocity will have to be


introduced in March. We say that if such a Budget is to be introduced, if the country faces such severe problems as the Governor of the Bank of England and sometimes Ministers describe—although Ministers are not consistent in the matter—it must be a Budget which seeks to readjust by deep and radical measures the gross disproportions of wealth. It must deal with wealth as well as incomes and must go to the root of these problems. That is why we have argued this case and put down a motion.
Since it will have to be such a Budget as that, a Budget dealing with such questions as that, we do not expect this kind of radical step from the Conservative Party, and particularly not from the present Chancellor. One of the least surprising aspects of the gossip which has been leaked out from the Cabinet in the last week is that the Chancellor is the man most in favour of cutting and running. This is exactly what we would expect of him.
It was once said by Charles James Fox that a wise statesman is one who uses the sober moods of a people to guard against the hour of delirium. What the Chancellor would apparently like to do—there may be one or two who agree with him—is exploit the moment of delirium in order to press through measures which, in their sober moods, the people of this country would not be willing to tolerate.
That is the Chancellor's approach to our national politics. Whether he has the support of the Prime Minister, we do not know. However, the Prime Minister has already contributed gravely to the divisions of the nation by seeking to say to the miners, and possibly to the rest of the working people—they are lined up with the miners, united with them, so he is apparently saying it about them as well—that it is a crisis, a clash, between the people and Parliament.
I must say that this Prime Minister as a defender of Parliament is a more bizarre and daring impersonation than anything every attempted by Danny La Rue. No Prime Minister in modern British history has done more to debase and corrode the standards of parliamentary government than the present Prime Minister. It was under his incitement that we spent the first year of this Parliament pushing through an Act designed to remove the last effective control in industrial affairs away from

this House to the law courts. So brilliantly effective was that piece of legislation, that even the Prime Minister dare not touch it on the mantelpiece, where it now stands.
Then we spent the next Session pushing through the European Communities Bill. It would be almost masochistic to mention the Common Market in these days, would it not? But it is fact that, during that second year, Parliament spent hours—how many hours I do not recall—deciding that the proper authorities to fix parities, food prices, regulations about juggernauts and all such other matters were the people in Brussels. We decided that all such power was to be given to those men in Brussels or to the executive bodies of the Government in this country. In any case, it was to be taken away from this House.
In the third Session, under the incitement of the same Prime Minister, we spent much of our time establishing the Pay Board and the Price Commission. Nobody knows what powers they have or whether they are exercising them properly. No one knows—at least, apparently the Prime Minister does not know himself—when the Government can intervene in a matter of exceptional crisis. Heavens above, if that section in the Act is not to be used when the country is suffering the deadly and debilitating effects of the industrial crisis at the moment, when in Heaven's name is it to be used? So skilfully was that Bill passed through the House, taking away the final voice in these matters from the House of Commons, that even the Prime Minister does not know when he can invoke that power.
Whenever this House decides to surrender its powers, whenever it becomes weary of our methods, when people think we do our business so badly—I do not say that it is perfectly done—danger follows. It is the claim of those who defend parliamentary government and democracy that, in the end, this is the place where the collective wisdom of the British people should be expressed, particularly by Governments and Oppositions who have faith in the institution. The Prime Minister has never shown any such faith. All his politics have been directed to deriding and undermining the House of Commons.
The only way in which the authority of the House can be renewed is by a new General Election. Therefore, despite all


the arguments which may persist among Conservative Members, the sooner electoral decencies permitting we can have that election the better. The sooner we can get a new Government the better. Right hon. Gentlemen opposite have forfeited the right to speak for the nation. The sooner they get out of the way for those who will speak for the nation, the better for all concerned.

4.20 p.m.

The Secretary of State for Social Services (Sir Keith Joseph): The whole House listened with envy and admiration to the hon. Member for Ebbw Vale (Mr. Michael Foot), who spoke for 35 minutes without a single note. I have, perhaps, deluded myself in preparing a speech on the basis of the motion, which the hon. Gentleman did not even discuss. I have now set aside my prepared speech and I shall try—though I cannot hope to rival the hon. Gentleman—to answer what he said from a single page of notes on which I have recorded the subjects which he raised.
No hon. Member will be surprised that I am not qualified to enter today into the merits of the miners' dispute. This is not a debate primarily about that dispute, although it is referred to in the motion, and indeed there is a meeting going on at this moment between the TUC and my right hon. Friend the Prime Minister and other Ministers. But in the light of the hon. Gentleman's remarks there are some general points that I can make related to the subject.
The hon. Member for Ebbw Vale made great play about the future need—indeed the present need—for more miners. He invoked precisely the laws of supply and demand which the Labour Party has constantly reviled and which it has tried to escape by the whole process of nationalisation and by that constant invocation, not of the laws of supply and demand and the mechanism of the free market—which we on the Government side far prefer—but of the difficult distribution of resources according to some inevitably subjective assessment of what is called "fair shares."
The Labour Party has constantly said that the division of income should be according to some doctrine of fair shares. But here the hon. Member says, "Not

for the miners ; for the miners supply and demand ; they should get more, because they need more." What about the nurses? What about other equally deserving groups?
For two years the present Government tried to operate a policy that would achieve growth and increased prosperity for the country in a free market with free bargaining. They were forced off that policy by the refusal of some elements in some trade unions to work with the essential elements of compromise, give and take and reason that alone could reconcile growth, prosperity and full employment in this competitive world. It was with great reluctance that we were forced on to the second best course that we now follow, namely a prices and incomes policy. I must remind the House that the reason for the deficit for which the hon. Gentleman so criticised us was precisely the purpose which the whole House shares—growth and higher prosperity, value for money and the ending of inflation for all our people.

Mrs. Barbara Castle: Have not the Government commissioned from the Pay Board a report on relativities as part of their own phase 3 policy designed to provide a way of giving special treatment to special cases? As the report has been in the Government's hands since Saturday, will the Government place a copy of it in the Library so that the House may decide whether it provides a basis for the settlement of the miners' claim?

Sir K, Joseph: I am sure that the right hon. Lady meant well by that, but we have said that the report is being published as soon as it can be printed. I think that it will be out this week.
The hon. Gentleman did not explain to the House—it was not his brief to do so—that the second half of our period in office has been dominated economically by a dramatic fall in our terms of trade and that a soaring range of raw material and food prices overseas has involved almost every industrial country in high domestic inflation. It has been a considerable achievement of this Government by every method to our hands—competition, tax policy, nationalised industry pricing policy and the Price Commission—that, despite the increase in world prices of just on 40 per cent. in the last


year, domestic inflation has been kept—alas, to a high figure, but kept—to 10 per cent.
But what I should deal with most is the hon. Member's prescription for success. What he said to the House and what the motion says is that the way to achieve what he wants for the country is to embark on a further pursuit of egalitarianism. He said that he thinks that the Government should bring in a far more drastic redistribution of wealth and incomes than, he implies, the Labour Government ever set their hand to. He suggests that is the way to reconcile the people of this country and to produce the prosperity that he wants.

Mr. Eric S. Heffer: Would not the right hon. Gentleman take into account what the Director-General of the CBI said only today—that there has to be a great redistribution of wealth?

Sir K. Joseph: I do not have to agree with the Director-General of the CBI just because I do not agree with the hon. Member for Ebbw Vale.
Compared with many of our neighbouring countries, this country still has class differences. They have been blurred over the generations, but they are still far deeper, far more pervasive than all hon. Members would wish, but we need not exaggerate them—and they are blurring.
The differences between the rich and the poor—and they are not the same as class differences—are, on a historical basis, dwindling very fast. The distribution of wealth is still fairly wide and I would claim that in a free society, provided the difference is not too great, there are social, moral and political virtues in independent wealth. I am not and do not pretend to be an egalitarian, but equality is anyway impossible ; equality at breakfast would be inequality at supper. Inequality has its advantages provided it is not excessive.
But in terms of the distribution of wealth we have, over the past decade, had a sharp decline in the difference between the rich and the poor. I refer the House to the article by Professor Alan Day in the Observer yesterday. Even in the past eight years there has been a further drastic diminution of the gap between the ownership of wealth of

the wealthiest 10 per cent. and the rest of the population.

Mr. Neil Kinnock: If the right hon. Gentleman reads the whole of what Alan Day said, he will discover that he said categorically that the main reason for the narrowing in disparities of income was the fantastic inflation of property prices, something for which the Government have great responsibility.

Sir K. Joseph: If the hon. Gentleman will read it accurately, what Alan Day says is that there has been a very large increase in the value of house prices. He does not refer particularly to property ; he refers to owner-occupation and house prices.
No observer would deny that the inequalities of wealth have been dwindling historically fast. The inequalities of income are far too exaggerated by most observers. The inequalities of income have already been sharply reduced by the very high level of progressive taxation in this country. After all, in this country we have taxation which at the maximum level is 75 per cent. of earnings and no less than 90 per cent. of investment income. That leaves very little, even for the wealthiest recipients, of investment income—10 per cent. is what is left. [Laughter.] Hon. Members are wrong to mock, for reasons that I shall come on to explain.
If we were to remove all the remaining income from those who receive more than £5,000 net a year, the total yield would be £400 million a year. That would be enough for an extra bonus of 30p a week for a every wage earner and self-employed person in the land. That is all the scope left for re-distribution of income. I now come to the hon. Gentleman's principal argument. [HON. MEMBERS: "Nobody has believed you yet."] Hon. Members say nobody has believed me so far ; would they believe their right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins), who said precisely the same last year?
The hon. Member for Ebbw Vale has to answer two propositions: first, do differentials matter? In the view of this side of the House, differentials matter very much. Indeed, the whole purpose of the miners and ASLEF shows how much differentials matter to them.
Secondly, would the hon. Gentleman consider this proposition, which I put to him with diffidence because I do not know whether he has addressed his mind to it? Many of our neighbouring countries—I am thinking particularly of the Scandinavian countries, of Germany and of Holland, have a standard of living higher than that of the people in this country ; they have less poverty ; they have more prosperity ; they have full employment. Yet they have much greater inequalities of earned income. The pay of managers in Germany, in Holland, in Scandinavia—[HON. MEMBERS: "They are better managers."]—Perhaps they are better managers, but their pay is much higher than that of managers here.
Hon. Members opposite will say that undoubtedly those countries must tax their managers highly. Perhaps they do, but they tax them much less highly than our managers here are taxed. Income for income, the tax at maximum levels of taxation in industrial competitor countries is far lower than it is here. The inequalities of income in those countries are far greater than here, and yet their prosperity is far higher and their poverty far less.
How can it be that the hon. Member's rhetoric would undoubtedly produce the answers that he wishes when we see our neighbours, although with greater inequality, having more prosperity? I am not arguing that we need greater inequality and I shall come to what I am arguing when I have given way to the hon. Lady.

Mrs. Shirley Williams: Would not the Secretary of State, of all people, consider that the proper comparison is taking taxation and national insurance together, in which case the contribution in virtually every country that he mentioned is either equal to or higher than our own?

Sir K. Joseph: I think that the hon. Lady—and perhaps it is rare for her—is totally wrong. I think that the hon. Lady is wrong at the highest levels of income, but I shall certainly look again at my argument and let her know.

Mr. Tom King: Is not my right hon. Friend aware that many multinational companies, wishing to move ;Some of their best managers back to this

country, even in the present situation find it almost impossible to do so and to reward them adequately when compared with their European standard of living, and that if the Opposition's policies were successful it would certainly be totally impossible?

Sir K. Joseph: I confirm what my hon. Friend says.
The reason why the hon. Member for Ebbw Vale is so wrong is that he and the Opposition tend to focus on the distribution of wealth as if distribution were the only thing that mattered. Distribution matters very much and social policy matters very much, but there is a third factor that matters, and that is the total level of national income, and it is upon the total level of national income that the hon. Member has not fixed his attention. I would even go so far as to ask him to accept that profits have a value—they are the motive for the best use of resources. I would say that profits earned under the law in a competitive economy are the best friend of the poor in our land.
I ask the hon. Member to look at countries overseas that have fewer poor than we have, that have far more socially effective policies for their dependants than we have, far larger pensions than we have, They have learned their lesson, and, by competition under the law and by allowing incentives to work, and by one other factor which is most important and to which I am coming, have achieved nearer to what the hon. Gentleman would call, I hope, social justice than we have yet achieved.
I come to the missing factor in his speech. What is it that distinguishes those countries' economies from ours? They have no higher talent than we have. What they have—and some have won it only after decades of struggle—is a greater spirit of co-operation between management and labour. I am not saying that there are not in this country many fine examples of co-operation between management and labour, earned and secured over years of endeavour ; there are such. Even now, in an emergency, I think that there is great co-operation in a vast number of places between management and labour. But the fact is that in most of our enterprises, public as well as private, for most of the time there


is far too little co-operation in the common interest.
But that fault cannot necessarily be put on one side. It is management that has to initiate and it is workers who have to respond. Nevertheless, what I have been describing in those other countries has secured for their people larger pensions, a higher standard of living, higher earned net income and less poverty than in this country. The hon. Member's ineffective recommendation of more and more redistribution of a stagnant national cake is no way forward.
What I must ask the House to consider is whether either the motion or the hon. Member's speech has represented the true position. Is it true, as the motion suggests and as the hon. Gentleman tried to argue, that we still live in the days described by Disraeli in "Sybil," in a state of two nations? Is it true that we still have a simple picture—[Interruption.]—I am trying to answer the hon. Gentleman's speech and I think that the House would wish to allow me to argue this out. Is it true that we have a simple picture as Disraeli no doubt accurately described, of a small group of privileged people on one side and on the other the vast majority of the people?
I do not believe that it is at all like that today. I believe that the fact is that the main struggle today is between different sections of wage earners and their own brethren. I believe that when some wage earners create industrial trouble, the people who suffer are other wage earners and pensioners and the sick and the unemployed. I believe that they are striking their own brethren far more than anyone else. When there is industrial strife it is the very seed corn of growth and prosperity, the very basis of higher pensions and less poverty, the confidence to improve investment, that is eroded and destroyed. That is why our neighbours, who do not have this constant struggle at the work place, have soared over our standard of living.
I believe that we have a far harder task ahead of us than the hon. Gentleman suggests. If it were simply possible by yet another redistributive Budget to redistribute and by that means alone to unlock the talents and energies of the people, do you not think, Mr. Deputy Speaker, that either a Labour Government, who did not take that path, or the

Tory Government would have done it? No ; it is a far harder task that this country faces—to mobilise co-operation which in other countries is turning working people into middle-income people before our eyes.
I point out that the Government have not deepened divisions but by a series of initiatives in the social field—which I could have catalogued—have reduced divisions. We have brought closer to normality the lives of the elderly by reviews in pensions, by making up-rating an annual matter, by improving benefits year by year and by bringing in entitlement to pensions for the over-eighties.
We have done more for the poor and hard pressed than the Labour Government ever did. Do not my hon. Friends remember, when the last Labour Government came to power, that categoric pledge—it was more than a promise, we were told—that a minimum income guarantee would be introduce to help the poor and hard pressed? But we now remember that that pledge was totally dropped. Did the last Labour Government help the poor and hard pressed? Not one jot. The last Labour Government lowered the tax threshold, whereas we have raised it. The last Labour Government piled extra contributions for national insurance on the lowest paid whereas we have kept the national insurance flat-rate contribution for the low paid precisely as it was when we took office, although we have increased benefits by 55 per cent.
The last Labour Government made no preference for the low paid in their incomes policy whereas we have made a precise preference for the low paid in our incomes policy.
We have brought the chronic sick and disabled closer to normality. We have not done nearly enough but we shall pay out this year almost £100 million in extra benefits for the chronic sick and disabled. In this respect Labour never paid a penny.
We have devised a tax credit system, which Labour wished they had the wit to devise. It will help automatically, without a means test, the poor, the hard pressed and the elderly and those at work.
We have done more for the neglected groups—the deaf, the alcoholics and the arthritics—than has been done by any


previous Government, let alone by any Labour Government. We have reduced the divisions, not increased them.
Until both sides can agree on the way forward and we have learned the lessons of neighbouring countries which have, alas, done so much better for their dependants than we have done for ours, we shall not get the right answer. The hon. Gentleman puts his great eloquence into misrepresenting the cause when he pretends that redistributing the last 25 per cent. of earned income and the last 10 per cent. of investment income will answer the problems of this country. I hope that my right hon. and hon. Friends will reject the motion.

4.45 p.m.

Mr. Michael Stewart: I at once pay tribute to the Secretary of State. We now know quite well why he was chosen to reply—a question raised by my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot). The Secretary of State is one of the few members—or probably the only member—of the Government with the wit and the courage to make a spirited intellectual defence of the injustices and inequalities of our present society.
But he was wrong on two major matters of fact. He said that we did not help the old people and the pensioners. One of the first actions of the Labour Government, in 1964, was to make a bigger increase in the real value of old-age pension-related benefits than had occurred since Clem Attlee's Government in the 1940s. The Secretary of State also said—

Sir K. Joseph: Surely I was justified, because over the next four years there was no increase in real terms whatever in the value of the pension.

Mr. Stewart: The right hon. Gentleman is not even right about that. I know that we ran through many difficulties, and I shall have something to say about the difficulties of this Government and about how they have handled them. But the right hon. Gentleman was wrong in saying that our incomes policy made no provision for the lower paid. During the grim period of what was called severe restraint almost the only exception to the general rule against wage increases was in favour of 2 million lower-paid

workers. The Secretary of State not only made an error of fact but he did something beneath his dignity intellectually by saying that if there were equality at breakfast time, it would be inequality by supper time. That is not a reason to fail to pursue justice and equality all the time. If a man cleans his teeth at breakfast time—even in the dark—they will be soiled again by supper time. It is not a reason for not seeking continuously for cleanliness and hygiene.
Let me spell out the position, although I know that the right hon. Gentleman has the wit to know it for himself. None of us on this side pretends that there can be absolute equality of incomes. We say that the inequalities in our present society are too large and, more seriously, are too little related to any function or service rendered to the community and that this is not merely an injustice but a damage to the efficiency and whole working of our society. That is what the argument is about.
There has been a convention in British politics that if things go seriously wrong under a Labour Government it is wholly and exclusively that Government's fault but that if things go wrong under a Tory Government it is somebody else's fault: it is possibly the fault of some ugly foreigners, or if that cannot be made to stick, it is the fault of working men and trade unions. For quite a time this convention, dutifully supported by certain sections of the media and public opinion, has served the Tory Party quite well, but its credibility is wearing thinner and thinner as we look at the plain facts.
What are they? The Government won the election basically because they claimed to be able to deal with rising prices and industrial disputes. What has now happened? Prices have risen and the rate of inflation has been faster than that ever known before in our peacetime history. The pound is in greater danger than it has ever been in our peacetime history. As to the Government dealing with industrial disputes, look at the number of days lost in industrial disputes, for three years after the Government came into power and three years before. The number of days lost through industrial disputes has increased two or three times, and that is saying nothing of the time lost through refusals or unwillingness to work overtime.
Under the Labour Government it is all the Government's fault. Under this Government it is the fault of the wicked trade unionists. No doubt the sycophants who support the Government will go on reciting that story, but it carries less and less conviction. The Government claim to know how to deal with industrial disputes. They passed an Act for that purpose, an Act which we know in our present difficulties they dare not use.
Why have the Government landed in this difficulty? Surely it is for this reason. Any success for the Government's policies depended upon the assumption that people who were in a strong economic bargaining position would exercise what one may call restraint or public spirit. Those who are in a strong bargaining position make up a very mixed bag. In one context they are landowners, particularly owners of land which will be needed for public purposes. In another context they are coal miners. The Government's whole policy and hope of success depended on the assumption that these groups would exercise restraint, public spirit, or—to use the right hon. Gentleman's phrase—compromise and give and take.
I wonder whether hon. Members have realised this: assuming that today, with the Government's consent, the National Coal Board were to double the offer which it is at present making to the miners and the miners were to accept that, the miners would still be exercising a very great measure of public spirit and restraint compared with what they could get by their sole bargaining power in a free market. This is one of those facts that we have lived with for so long that people have tended to forget it and have assumed that somehow the miner must always show more restraint and public spirit than is ever expected of the landowner.
This casual assumption is the more dangerous because what is in question is not merely how we settle the present mining dispute but how we are to get enough people to be willing to work in the mines in the future. Human beings will exercise restraint, public spirit, compromise, give and take, only if they are inclined to think that the general trend of society is moving towards social justice.
That is why arguments about exactly how many packets of cigarettes a poor man would be able to afford if all incomes over £10,000 a year were shaved off have no bearing. It is not a question of amounts. It is a question of the outrage at seeing a society in which not only are the incomes desperately unequal but in which the inequality has no relation to any principle of justice, function or service to the community.
This is what of all people the President of the Confederation of British Industry has been pointing out to us. Capitalism must have come to a pretty pass if the President of the CBI, in a desperate attempt to get a united effort from the nation, has to agree that we ought to have a more fair and a more equitable society. Quite a number of us have been saying that for some time. At last the message is coming home.
Alas, when the Government were in a position where the one thing that they needed for the success of their policies was to make people believe that society was moving towards greater justice, on all their major issues of policy they have moved in the other direction. I accept that the Secrtary of State for Social Services in his own Department has laboured very well to help particular groups of people who were very hard hit ; but, alas, these have been only tiny fields in the general structure of society.
What has happened in fact? In the Budget some time ago there were the arrangements about taxation which worked so extremely well for those who are very well off indeed. Then we had that other budget which was supposed to deal with the great emergency but which did not face the need to create greater equality.
Here again, it is not just a question of just shaving off at the moment from the top and giving to the bottom. It is the whole trend of Government policy. We are told on all hands—I believe it to be generally true—that this country now faces a very serious economic situation indeed. It would do so even if it were not for the mining dispute and the trouble over oil, though those factors add to it considerably. In those circumstances I believe that any Chancellor ought to say at least privately to himself, and possibly


publicly, that those who at present have, say, twice the average income ought not to expect their standard of life to rise, either through higher incomes or profits or by tax reliefs, until we have very substantially struck at the desperate poverty that still hits very large numbers of our people.
The important thing is to have a general trend of policy like that. We as Socialists have often been lectured by defenders of the present order of society in terms like these. We have been asked, "Why do you talk so much of levelling down? Is it not much better to level up?"
For my part, I happily accept that doctrine. I do not think that those who preached it realised what a revolutionary doctrine it is. What we must now say is that there are a certain number of people in this country—I will not argue about the exact figure—who have a standard of living which is at least twice the average and to whom we can fairly say, "You must now wait until we have done a great deal for those who are less fortunate than yourselves."
That is exactly what the Government have not done. The pursuit of inequality by this Government does not stop with their budgetary policy. It is true also in their housing policy. I have urged also that one of the most serious defects of the Governments' housing policy is their deliberate cutting down on the building of council houses. When we on this side say this we are told, "You are being doctrinaire. You want everyone to live in a nice council flat." That is not the point. Any reduction in the rate of council house building makes it easier for those who are already moderately well housed to get themselves a little better housed, but it also steadily reduces the hopes of those who are much worse housed of ever getting themselves better homes.
This is a continual policy of the Government not only in taxation and housing but in education, too.

Sir K. Joseph: Where there is an international skill like medicine and where there are eager seekers for our doctors abroad, would the right hon. Gentleman still say that, after years and years of training, a doctor is not to get any improvement in his standard of living for years? Incomes policy, alas, compresses

differentials sufficiently already. Is that what the right hon. Gentleman is saying?

Mr. Stewart: I should have thought that my figure still left enough room for differentials. I may be a little old fashioned, but I still believe that there is a great number of skilled people such as doctors and engineers who love this country and who would be willing to help if they had in power a Government who really showed that they wanted to work to make this a just, humane and worthwhile country.
I was saying that it is not only in taxation and housing but in education, too. In the financial measures prepared by the Chancellor before Christmas we were told, "One great virtue is that you do not have much heavier taxation. We are going to meet it instead by cutting public expenditure." In particular, the Government made the most savage cuts on public education. This means that those who are already well enough off to have the children educated at what are called public schools will remain untouched. The rest of the nation will have to put up with a less good quality of education.
What is more, there has been and remains the continuing steady opposition of this Government to comprehensive secondary education, which means encouraging our citizens, from when they are about 10£ years old, to be more interested in the different gifts and abilities which divide us rather than in the common humanity which ought to unite us.
Above all, there is the steady encouragement of profiteering under the present Government. We had a few pathetic measures about land profiteering recently announced, but everyone knows that they do not seriously touch the problems. Here again, it is not a matter of exact amounts. We shall be told that if the total sum which someone won by profiteering in land were divided among all the mining communities it would amount to so many pence each. That is not the point. What matters is the gross example and the gross insult to everyone who works hard for his living of seeing a society in which people are munificently rewarded not merely for doing nothing but for doing things actually against the public interest.
This is not a new situation. It was set out to the nation in one of the finest


pieces of work in the English language, in Professor R. H. Tawney's "The Acquisitive Society", written 50 years ago, and again in the context of a mining dispute. Professor Tawney points out what happens when we create a society in which it is generally believed that if one is in a strong bargaining position to grab, one is entitled to grab. He says:
Men will fight to be paid £30 a week instead of £20 as readily as they will fight to be paid £5 instead of £4, as long as there is no reason why they should be paid £20 instead of £30, and so long as other men who do not work are paid anything at all.
Neither Professor Tawney then nor I now is thinking of those who, through age, infancy or disability cannot work. We are talking about those who could work, who could contribute to society, but who not only do not but who injure society and do very well out of it. Professor Tawney continues:
If the community pays anything at all to those who do not work, it can afford to pay more to those who do. The naive complaint that workmen are never satisfied is strictly true. It is true not only of workmen but of all classes in a society which conducts its affairs on the principle that wealth, instead of being proportional to service, belongs to those who can get it. As long as men make that principle the guide of their individual lives and their social order, nothing short of infinity can bring them satisfaction.
That message was spelled out to us 50 years ago. We have imagined that our greater productive skill and our affluence had nullified that vital moral and social message which Tawney taught us. We realise now that they have not. We shall not get things right unless we profoundly reconstitute out society with a view not only to greater equality—I admit that there can be argument about how much differential one ought to allow—but also with a view to establishing greater justice.
It is this latter principle of greater justice which, if I may say so, the Liberal Party has not fully grasped. If we want to create a society on the principle of greater justice, we must recognise that this involves a far greater measure of public ownership, especially of land, than Liberals have yet been prepared to swallow. Above all, however, the necessary reconstruction of society is something of which neither this Government nor the Conservative Party is capable.

5.4 p.m.

Sir Anthony Meyer: I am one of the many hon. Members on both sides of the House who still remember the right hon. Member for Fulham (Mr. Michael Stewart) as a great British Foreign Secretary, and I had hoped that his contribution to today's debate would be somewhat less partisan and rather more forward-looking than it turned out to be. None the less, in my brief speech I shall be echoing many of his observations about the need for greater social equality, though with the difference that I believe that he and many of his hon. Friends greatly overestimate the contribution to the resolution of our difficulties which can be made by the introduction of even so complete a social equality as some of them would like to see.
I fully accept the need for national reconciliation. I should like to think that this was what was in the Opposition's mind when they asked for today's debate, but it was difficult to maintain that hope after the speech of the hon. Member for Ebbw Vale (Mr. Michael Foot).
For my part, I should like to see the Government hold out the hand of friendship not only to the trade unions but also to the Labour Party. If it could be done by a wave of the wand, I should be happy to see a national coalition tomorrow ; but I know very well that I shall not. Whatever party or parties are in power, however, they must at the very least maintain an effective counter-inflation policy, and that must include an effective incomes policy. It is sheer dishonesty to pretend that an effective counter-inflation policy can be secured by price control alone.
I believe also that whatever Government are in power must maintain an active British presence in Europe, because that is our best chance for the future. And it goes without saying that no British Government worthy of the name can play politics with the country's defences.
On all those counts, the declared official policy—I underline "official"—of the Labour Party offers no possible basis for that closer co-operation between the parties which to my mind is so desirable. I believe, on the other hand,


that the present Government's policies offer a basis for that kind of co-operation.
I accept that there has to be something more than a mere gesture of good will towards the Labour Party. I suppose that a declaration of readiness not merely to amend the Industrial Relations Act but to begin again from scratch would be a start. I strongly support the Housing Finance Act and I still regard it as a progressive social measure, but if the Labour Party maintains its absolute refusal to swallow it I suppose that we should consider putting it on the table as a bargaining card. To my mind, however, what would do far more to create a sense of social justice would be to tackle, as the right hon. Member for Fulham suggested, some of the grosser inequalities of wealth in this country.
By and large—this is where I disagree with the hon. Member for Ebbw Vale—income in Britain is equitably shared: Capital certainly is not. I should like to see a radical scheme for producing a division of capital as equitable as the present division of income.
There will be no coalition based on that or any other programme, of course, but it is not unrealistic to hope for, and to work for, growing co-operation between the moderates in all parties. Recent speeches by the right hon. Members for Birmingham, Stechford (Mr. Roy Jenkins) and for East Ham, North (Mr. Prentice), a particularly helpful speech last week by the Leader of the Liberal Party, sensible advice tendered to the miners by the hon. Member for Wrexham (Mr. Ellis), a most constructive and interesting article in yesterday's Observer by the hon. Member for Berwick and East Lothian (Mr. Mackintosh) all show that there is an increasing number of hon. Members in both opposition parties who are ready and willing to support policies of conciliation. I hope that there will be a ready response from hon. Members, and still more from right hon. Members, on this side.
Because this growing co-operation between moderates might be set back by a General Election, I have on the whole been reluctant to see one now. If there has to be an election, its only justification is to show that no minority—even a minority as resolute and as sincerely convinced of the justice of its claim as

the coal miners—can be allowed to dictate policy to the elected Government.
If it were only the miners who were challenging the Government, perhaps an election would not be inevitable. What worries me is the growing tendency not merely for determined miners to seek to impose their will on the majority but, more worrying still, for the majority weakly to acquiesce in that state of affairs in order to save itself trouble in the short run.
So far, those determined minorities have all been on the Left, but it may not always be so. This process must be arrested if democracy is to survive. If an election to crystalise a majority one way or the other is the only way to stop that process, sadly we must have an election. If, however, the moderates in the Labour Party and, more important at this juncture, the moderates in the trade unions continue to pluck up their courage as they have done in recent days, it will be neither necessary nor justifiable to hold an election. Even the most convinced advocates of an election will now admit that it would not of itself solve any of the nation's problems.

Mr. Alexander W. Lyon: The hon. Member is making a case for the moderates. In a situation like this, he assumes that if we had an election the best thing would be for the Conservatives to be returned. If they were returned, how does he think the so-called militants within the trade union movement would react? Does he think they would feel that the parliamentary process was likely to give them the kind of opportunities they desire, or does he think they would then believe that only even greater militancy was required? That was the effect upon the Communist Party of losing two Members in 1950. In the event that was perhaps a disaster, because it meant that Communism was then retained only within the industrial wing. Would it not be better if we were to have no election or, better still, a Labour majority in order that there might be an opportunity for the so-called militants to see that the partliamentary process gave them what they wanted?

Sir A. Meyer: I have said already that I hope it will be possible to avoid an election. The hon. Member leaves out of account that everyone is obsessed by the


determination of the miners not to accept the offer made to them and their tendency to overlook the very large number of trade unionists who have already accepted settlements under phase 3 or are preparing to do so. If the miners can compel the Government to give in to them, it will be extremely difficult for moderate trade union leaders to retain the leadership of their followers. The only justification for an election would be to prove that the country wished an elected Government to stick to their policy. I would be one of those who after such an election would urge that the victorious Conservative Government should adopt as conciliatory an attitude as possible to the unions.
However, I return to my arguments. [HON. MEMBERS: "Answer the question."] The basic difficulty we face is that the people have come to expect a faster increase in their standards of living, in the standards of the social services and in the quality of the environment than can possibly be achieved during the next two years and perhaps even during the next 10 years. If they do not get these improvements—I ask hon. Members on both sides seriously to ponder this—they will blame whoever is in charge. Some of the blame for this unfulfilment of expectations rests at the door of the Government because of their public and over-optimistic commitment to a growth policy. But at least they can claim that this attempt to break out of Britain's poor growth performance could have succeeded if only the price of raw materials had shown a reduction at the end of last year as there was every reason to expect.
What cannot possibly be excused, as Labour Members know in their heart of hearts, are the hopes which even now are being held out by some Labour leaders, most notably the Leader of the Opposition, that if only the Government would abandon confrontation and give the miners all they want at a stroke, we could all enjoy a higher standard of living without actually having to work for it. [HON. MEMBERS: "He has not said that"]. It is not surprising that such irresponsible nonsense alarms the right hon. Member for Stechford.

Mr. David Stoddart: Mr. David Stoddart (Swindon) rose—

Sir A. Meyer: It is essentital to be honest with the nation and to tell the people that for the next two years or more there will be no rise in living standards as a whole. If people want the miners to get much more than the present offer, if they want, as we all want, higher pensions and if they want the environment to be improved, the rest of us must accept not merely a standstill but an actual fall in our standards of living. Soaking the rich will not help appreciably, as we have seen from the figures given by my right hon. Friend—

Mr. Eric S. Heffer: We might as well start with them.

Sir A. Meyer: It would have to be done with a good deal of care if it were not to frighten away the foreign capital investment that the country so desperately needs and if our present difficulties are not to become a permanent part of our condition. In the short term the need is to reassert the authority of the elected Government and repair the defences against hyper-inflation. It may be easier to achieve this if some concessions are made to organised labour, but they must not be in the sphere of the Government's authority or connected with the defences against inflation. I have suggested a fairer distribution of capital as one possibility. In the long term the nation must put more of its resources to capital investment and less to current consumption than has been the case for a long time.
I am doubtful whether the short-term aims can be achieved with the acrimonious and sterile two-party system that we have at the moment. I am still more doubtful whether the long-term aims can be achieved with such a system. High-pressure investment which involves giving priority to drilling rigs before schools and hospitals, and giving preference to the people we need rather than to those in need, is a harsh and unpopular policy. Most countries use a dictator to carry through such a policy. I believe that we could pull it off within a democratic system, but only if the moderates work ever more closely together and only if they show themselves every bit as tough as the extremists. There are many Labour and Liberal Members who have a vital part to play in this process.
The Leader of the Opposition, as every Labour Member knows in his heart of


hearts, has no such part to play, but the Prime Minister, awkward and unbiddable as he may be, has the courage and resolution without which the most conciliatory moderation would avail us nothing.

5.19 p.m.

Mr. David Steel: The House has just listened to a remarkable speech from the hon. Member for Flint, West (Sir A. Meyer), a speech full of pleas for conciliation but peppered with inflammatory comments. However, I agree with some of the hon. Gentleman's observations, and with two in particular.
First, into the current negotiations the Government should consider placing if not the repeal or change of the Housing Finance Act at least a cancellation of the next round of rent increases due in a few weeks' time. Secondly, it is time we came to an end of the argument about whether we are talking about repeal or amendment of the Industrial Relations Act. It is clearly a dead duck. When it passed through the House, the Government refused to accept amendments from the Labour Party or the Liberal Party. They drove the Act through unaltered. But they are not now using it. Therefore, we should end the argument about amendment or repeal and start again.
It seemed to me on listening to the two opening speakers, the hon. Member for Ebbw Vale (Mr. Michael Foot) and the Secretary of State for Social Services, that we were hearing what had been prepared as the first act in an election drama, but that they realised towards the end of their speeches that someone had forgotten to order the scenery and that the whole performance had been cancelled. The Secretary of State appeared to be giving a lecture to the Conservative Political Centre rather than an argument in the present debate.
It is important to go back a few years to the time when the House first started to talk about a prices and incomes policy. Before we ever reached the statutory phases, we were talking about what was then officially called a policy for prices, incomes and productivity. In recent years we have lost the last two words from the discussion. It is to the words "and productivity" that we should return.
I recognise that for technical reasons productivity agreements cannot apply in

the mining industry, but the principle of a prices and incomes policy must be tied to greater production as well as greater equality. To me, the most astounding lesson of the three-day week is that industrial production has kept up at between 70 per cent. and 80 per cent., and that in some industries it has been higher. That has in part been achieved by people working longer hours and doing different jobs from those which they are used to doing. But the basic lesson is that if we could keep up over a five-day week, and sometimes a six-day week, the levels of output we have been able to achieve during the three-day working week crisis, many of our economic problems would be over. The Government should be examining what has been happening during that period.
I found it extraordinary that the television news thought it newsworthy and interesting, at least twice during the Christmas Recess when I was watching, to film meetings between management and labour, between company directors and shop stewards. It was news that people were sitting down together to decide how to get out of their difficulties. What I do not understand is why the CBI and the TUC and the Labour Party continue to drag their feet on the vital question of extending industrial democracy, giving people in their everyday working lives a greater say on how industry is run.
The Government have been promising us a Green Paper on the subject for some time. The proposals have been battered about between the CBI and the TUC. I suspect that if it ever reaches the Floor of the House the Green Paper will contain no proposals for Government action but will merely be a paper for debate, a paper emasculated down to the last common denominator of what is accepted by the hierarchy of the CBI and the trade unions.
Yet there is great scope in the working population and the management population at large. There is a great desire to have a form of industrial relations which is much more co-operative at grassroots level and which gives people working in industry a greater say at their place of work as to how that industry should be run.
That is my reply to the right hon. Member for Fulham (Mr. Michael


Stewart) when he chides the Liberal Party for not being prepared to go along with a massive extension of public enterprise. One of the disappointments about public industry in Britain is that it has totally failed to use its privileged position of public ownership, its position of not being responsible to any body of shareholders but being directly responsible to the Government, for experiments in more democratic control of industry, in greater working satisfaction, and in greater devolution of decision making. If that had been the record of public ownership, perhaps we would take a different attitude to it, but there is no easy answer there.
I do not see why we should have to have appeals to a phoney Dunkirk spirit before achieving the level of co-operation that the Secretary of State mentioned, a far higher level of co-operation at factory level between management and labour to increase productivity.

Mr. Heffer: I am not asking this to score points, but I should like to know whether the hon. Gentleman is suggesting that the co-operation leads to productivity agreements or that the joint works councils, or whatever they are called, lead to the workers having a real say in decision making. Is the hon. Gentleman aware that productivity agreements can sometimes be the very source of industrial conflict? I know that, having spent my whole working life in industry before entering the House.
Works councils which give workers a real say in the running of industry are a great extension of industrial democracy, and many Labour Members and members of the Labour Party outside have been advocating them for the past 20 years.

Mr. Steel: I am delighted to hear that. But I understand that the official policy of the hon. Gentleman's party has been still to resist the type of works councils that we want to see made statutory in every place of work employing more than 20 people, giving those who work in industry a greater say in how it should be run. During discussions of the subject at trade union meetings I have been told, "We are not in favour of this, because managers must manage

and workers work." My party opposes that attitude.
I took down the Minister's words when he said that management must act—

Sir K. Joseph: Initiate.

Mr. Steel: —that management must initiate and workers must respond. I am reminded of the definition of partnership advanced by a Rhodesian politician during the days of the Central African Federation, when he said that the partnership he envisaged between black and white was that between horse and rider. I suspect that the right hon. Gentleman is getting very close to that definition when he is seeking more co-operation.
We believe that the past few weeks have shown that, faced with adversity, people are driven together on the industrial front to work and produce a far higher level of output. Surely, a statutory provision enabling that to become the common experience of industry would be for the benefit of the country?
Having said that, and made the point about trying to obtain more growth and higher output, I must add that I do not think that in our society greater growth will automatically produce more happiness. One of the lessons we learn, particularly in large-scale industry in Britain, is that no amount of increased wage at the end of the week will compensate people for a life of industrial tedium. That is another reason for introducing forms of industrial democracy which give people not just a bigger financial stake in what they are doing but a greater feeling of involvement.
It is important to look at what other countries are doing, such as the experiment in Sweden, where the Volvo motor car company has constructed a complete departure from the car assembly line and returned to the concept of groups of people assembling the complete car to see what level of job interest can be reinjected into what has become a de-humanising process.
I come to that part of the motion which deals with social justice. The Labour Party must come clean on the question. I watched on television a good debate at the last Labour Party Conference on whether there should be guaranteed


national minimum earnings. It was interesting to see the division within the party on the motion, which was defeated. Those who supported it were representatives of the trade unions to which the lower paid belonged.
I believe that they supported it because the system of totally free collective bargaining, unrestrained by any form of statutory incomes policy, is bound not to lead to social justice. Instead, it leads to higher rewards for those with the strongest and most effective voices in the trade union movement. That is why we in the Liberal Party have always argued, during periods of both Labour Government and Conservative Government, in favour in principle of a statutory incomes commission, not to take away the decisions from Parliament—here I agree with the hon. Member for Ebbw Vale—but to advise the Government and Parliament on a fair distribution of the fruits of a prosperous society.
The Secretary of State should not minimise the great scope for an examination of the tax avoidance industry. It has become one of the growth industries in Britain.
Nor should we minimise the effect of the demonstration this weekend at Centre Point. If Centre Point were occupied tomorrow, the housing problems of London or the problems of tax avoidance and office accommodation would not be solved overnight, but Centre Point is a standing monument to the Government's failure to deal with some basic injustices in our society. One Minister has constantly gone on television and said that something would be done about Centre Point but, in fact, nothing has been done.

Mr. Patrick Cormack: Mr. Patrick Cormack (Cannock) rose—

Mr. Steel: That is why extra-parliamentary activity has been necessary to draw the public's attention and the Government's attention to a clear injustice.

Mr. Cormack: On this matter—

Mr. Steel: No, I shall not give way.
Another form of inequality is that which has grown up between the regions. The income figures for 1972 show that in the Coventry sub-region the average weekly wage of an adult male worker

was £37. In the Scottish border sub-region, which is an area which I represent, with a cost of living not very different, the average wage of an adult male worker was £23. That is too big a gap for any society to allow and accept which is aiming at equality or social justice.
That is why the Government must reconsider their present commitment to abolish regional employment premiums. That is vital not just as a method of attracting new industry—and maybe the Select Committee is right in saying that it is relatively ineffective in doing that—but as a piece of fiscal machinery to compensate industry for higher transport costs and to enable industry to pass on some of the benefits to its work force. Some form of REP must be retained and developed as part of the equipment with which to achieve a more just and equal society.
In the context of regional variations the Government must be concerned with its public spending programme. We should not countenance £2 million or £3 million of public expenditure on projects such as Maplin and the Channel Tunnel which will have an adverse effect on the regional structure and prosperity of Britain.
I must refer in passing to the amendment which has been tabled by my right hon. and hon. Friends. It is not just the policies but the postures of the two major parties which we constantly oppose. I do not believe that a divided party can do anything for a divided nation. I have read with interest the statements about the pressures within the Labour Party, for example, to ensure that if there were an election only the acceptable face of Socialism would be high-lighed to the electorate. No doubt we shall hear about part of that face later this evening. In the Government there is a division between the hawks and the doves. It is one which is now fairly widely advertised by Government Members. A Government which seeks to unite the nation cannot be based on sectional interests. That is why the country is suspicious of a party which derives £1 million a year from big business and a party which derives 90 per cent. of its election funds from the trade unions.
The people are now considering prices and incomes policies and they are looking


at the sectional interests which the parties represent. They are then asking, "Who is it who represents the consumers and not the voice of big business or the strong trade unions? Who is prepared to form a Government which will not set class against class, management against worker and house owner against tenant?"
A few years ago there was a popular song, which came from an American musical, in which the immortal words were sung:
And the people all said, 'Sit down, sit down, you're rocking the boat'.
During the past few weeks the ship of State has been rocked substantially and the people are saying to those responsible, "For heaven's sake sit down".

5.35 p.m.

Mrs. Connie Monks: In spite of much evidence of mirth at the beginning of this afternoon's proceedings, when I looked into the Gallery I did not there see evidence of mirth. I feel strongly that the nation and the public are criticising Members of Parliament for presenting the image to the country which is presented. I can assure the House that none of the people outside find the present situation amusing. In insulting any Prime Minister so blatantly as he has been insulted today, the person concerned does great damage to the democratic system and plays his part in bringing about the very situation of dividing the nation when we should be closing our ranks and ensuring that democracy is saved.
The wording of the motion represents the greatest piece of kidology which I have ever read. The momentous words of the motion which have hardly been mentioned today are in the title—namely, "The Divided Nation." If there is a division—and I do not accept that there is—we should be asking ourselves what we are doing in the House to help to heal it. Even to encourage the thought of the nation as divided is unwise, and it is folly to assert in the Mother of Parliament that it is divided.
We cannot all think alike, but in any democracy we must learn to accept a majority decision. That is one of the first things which we learn when we go to school, but some hon. Members have

not learnt it yet. Each group in the nation is interdependent with other groups, but we are all one nation and we prosper or we go bankrupt together. We share a common heritage and the hopes which we all share as a nation are infinitely more important than the differences of opinion which tend to divide us.
Perhaps I shall be accused of going back into history, but sometimes it would be wise if we did. There is a great deal which we can learn from the past.

Mr. Heffer: The English Civil War?

Mrs. Monks: I should imagine that the English Civil War is not something which we want to carry on in this age, which should be a little more enlightened, but sometimes there are heads which I should like to chop off—what would that do for conciliation? As hon. Members know, I manage mostly to keep my thoughts to myself.
It was Disraeli who exposed the gulf between the poor and the rich. There is nothing new about that. It was Disraeli's measures—and he was not a Liberal or a Socialist—which gave the working man the vote and completed the legalising of the trade unions. He did not know what he was doing when he did it, but he did it. Keir Hardie is a famous name to some Opposition Members. As we all know, he was not exactly a friend of the Conservatives, yet he wrote:
As a matter of hard dry fact, from which there can be no getting away, there is more labour legislation standing to the credit account of the Conservative Party on the Statute Book than there is that to their opponents.
But that was some time ago.
The Labour Government, in their wisdom, tried to evolve a system "In place of strife", and they were not allowed to succeed. My Government have evolved a pay and prices policy designed to be as fair as is humanly possible between producers and consumers alike. It is under attack. To allow the policy to be broken now would mean that in future whichever party held a majority in Parliament would be at the mercy of any group prepared to use its power ruthlessly. That would be the road to anarchy. That is a very solemn thought.
I agree with the Lord Chancellor that this country is facing moral and constitional issues of the gravest order, and we need to consider very carefully where we


are heading when inflamed self-interest appears to be taking over without any consideration for other groups who also have rights. With rights we must couple responsibility or innocent people will suffer, as they have been suffering in the last few weeks. Is this greed or a determination to wreck the system which serves this country well and is built in to our history? Possibly it is a bit of both.
Recently we experienced a moving example of national family loyalty when Princess Anne was married. [Laughter.] I was waiting for that guffaw. That day was a wonderful gesture to the whole world and proof, if proof were needed, of the fact that the vast majority of the British people are loyal to the Sovereign, to their British nationality and to this House, regardless of their politics.
We are one nation, and we shall prosper or fail together. A Government cannot be called divisive because it strives to protect the interests of the whole nation as against the selfish interests of groups or individuals. In fighting inflation, the Government are taking on the battle in the common interest for us all—[HON. MEMBERS: "Hear, hear".] I am glad to have the approval of hon. Members opposite. The Government are fighting the battle for those who are not economically powerful as well as for those who are.
In the long run, those who may, for a time, enjoy excessive wage increases—and we have had one since I became a Member—can find themselves priced out of their jobs.

Mr. Heffer: Excessive?

Mrs. Monks: Yes—in some cases, very excessive. Perhaps hon. Members would like to include me in that. However, the country as a whole suffers because the economy is unable to expand and we cannot compete in world markets. Our ability to compete in world markets is important. Only the Government can take an overall view, and even to suggest, as the motion does, that in so doing the Government are creating a division in the nation shows how out of touch the Opposition are with common sense views.
Our society needs to hold in check the weaknesses and follies of man, which are obvious today. We call our society the

"permissive society" whereby people may have the right to go to the devil in their own way. They have always had that right. But society as a whole—and I mean this very seriously—must be seen to support the virtues, especially tolerance, or we are lost.
Democracy is on trial. It is having to operate under a searchlight of publicity and with every word recorded so that any change of direction is noted and is open to criticism. This affects everybody—Government and Opposition. Many people lose sight of the fact that only a wise man and a brave man with no self-interest or false pride changes course when altered circumstances require it. A brave and wise man changes his mind ; a fool never does.
The Marxist idea of a class war is false to the history of this country. It is generated in the minds of those who have a permanent inferiority complex but want power. It is the essence of conservatism that it regards the common heritage and the sympathies of the British people, and the habits and hopes which we all share, as being infinitely more important than any differences of opinion which may divide us.

Mr. Heffer: Has the hon. Lady ever read Shakespeare?

Mrs. Monks: Yes, I have.
Our slogan has always been, "Trust the people". That is what we shall continue to do.

5.47 p.m.

Mr. Austen Albu: I am sure that there was a great deal in what the hon. Lady the Member for Chorley (Mrs. Monks) said with which we would all agree, but she will perhaps excuse me if I do not comment on her speech in detail.
One of the most interesting speeches we have heard today was that of the hon. Member for Flint, West (Sir A. Meyer), who plainly hankered after a coalition. A coalition would solve nothing. Coalitions only blur the real issues which the country must face. There was perhaps only one aspect of the matter to which the hon. Gentleman referred with which I agreed. In view of the failure of successive Governments to deal with the economic situation, it is time that we gave up the habit of instant opposition to new


economic policies proposed by any Government. Those with memories will know that that applies to parties on both sides of the House.
As my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) said, we face a crisis which was coming upon us before the oil and coal difficulties arose. The crisis—and there is a crisis—got the Government off the hook of one of the most devastating failures in economic policy and devastating balance of payments developments which this country has ever known. I wish to deal with the background, covering some years, to this situation because it must be understood before we can deal with the problem. The diagnosis is fairly simple. I only wish that politicians and economists would spend more time explaining the simplicity of the diagnosis than in pretending that they had the cure.
My right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) in a recent speech said that our society has now reached a climacteric. It is a climateric that is being reached in most industrial countries with mixed economies. They are societies that are entirely new, societies with universal franchise, universal secondary education, higher education for a large part of the population and, for most of the time, full employment. Accompanying this and caused partly by it are the rising expectations to which the hon. Member for Flint, West referred, both material and social, the material being continuously encouraged by advertising, particularly on television.
In a recent interesting article Sir Alec Cairncross quoted Rebecca West as saying, "When the poor feel as poor as the rich we shall have a bloody revolution." That is the situation we are in. Those who were poor are now less poor and they see within their grasp the things that throughout history other people have had all their lives. We have not had a bloody revolution, but we have undoubtedly had a situation which has made the management of the economy very difficult for any Government.
Since the war Governments have tried to deal with this situation by encouraging economic growth, but it seems as though the United Kingdom as presently organised is incapable of achieving a rate of growth faster than about 3 per cent. We have never had it in our history and it

does not look as though we can now reach it. Our attempts to burst through it have nearly always led to disaster. Those attempts have nearly always taken place under a Conservative Government just before an election, when the rate of economic growth has gone up to 4 per cent. or 5 per cent. and, immediately after the election has gone down to 2 per cent. or 3 per cent.—or the Government have gone out of office and left it to a Labour Government to clear up the mess.
For social reasons difficult to explain—and no one has satisfactorily explained them—on average we seem to be incapable of achieving more than 3 per cent. Nevertheless, since the war the rate of personal consumption has been going up nearly level with that, but the rate of public expenditure, mainly on health and education, but also on roads and so on, has been going up at a much faster rate. If to that are added our continuing efforts to increase investment both in public and private industries, the total adds up to more than we can produce.
Now we face a much worse position because of the change in the terms of trade. I do not agree that the Government had any reason to believe that the terms of trade would turn so rapidly in our favour as to correct the appalling balance of payments deficit in which they had landed us before the crisis arose.
This may well be my last speech in the House. In my maiden speech I remember saying that I thought the terms of trade would turn permanently against the industrial countries and ourselves. As so frequently happens with attempts to forecast the future, I was wrong. For most of the succeeding years the terms of trade were to a considerable extent in our favour. But perhaps I was wrong only by 25 years, because I believe now that the terms of trade are likely to remain much less favourable to us in the foreseeable future.
I certainly do not agree with an article in the last week's Economist which read like a piece of science fiction and prophesied that, somehow, in three, four or five years' time, we shall have not only a great surplus of energy but a great surplus of other commodities and that prices will fall very rapidly. That is against all reason. I am not a doomster. I do not believe that we shall run out of energy or other resources but,


obviously, as other countries consume more, as other countries industrialise and as poorer countries develop, the demand for raw materials and commodities will rise rapidly, it will be more difficult to exploit the resources of the earth and it will cost more. For a country that imports half its food and raw materials that must be very serious.
I therefore agree with the hon. Member for Flint, West that the standard of living in this country during the next three, four or five years is bound to remain at best static and at worst to fall. It certainly cannot rise. If money earnings rise we shall merely have inflation with serious social consequences.
There are only two solutions to this problem. The first is a new consensus on how we distribute what we produce not only between the public and private sectors, between investment, social services and personal consumption, but also between individuals. Alternatively, we can have free collective bargaining accompanied by such deflation as will lead to massive unemployment. The latter is the policy proposed by the right hon. Member for Wolverhampton, South-West (Mr. Powell), I regret to say sometimes supported, at least in part, by some of my hon. Friends below the Gangway.
The policy which most of us in the House would prefer, that of arriving at a concensus on how we distribute what we produce—especially in a period in which what we are able to produce will be able to purchase much less on world markets—is the only possible policy, but if we are to achieve it we must deal with the gross inequalities in our society to which my hon. Friends have referred.
These are inequalities not only of wealth and income but in the treatment of different sorts of people. For example, there is a difference in treatment between manual and other workers and on this I refer hon. Members to the interesting letter which appeared in The Guardian last week written by three trade unionists in the car industry. There are to some extent social differences as well as material and financial differences and as long as these exist a consensus on the distribution of what we produce will be much more difficult to arrive at.
As my hon. Friend the Member for Ebbw Vale said, the three-day week underlines these differences. Those who are paid by the week, month, year or quarter do not suffer from the three-day week. Manual workers with a guaranteed week who are paid by the hour lose their incentive earnings, bonus, piece rates and so on. If they do not have a guaranteed week, for half the week they get unemployment benefit which is less than they would have earned. That difference is not created by the three-day week. It is inherent in the system by which people are paid and the way in which they are treated. Unless there is willingness on the part of Government, industry, management and the country as a whole to move swiftly in the direction of changing this situation of gross financial and social injustice, the new consensus will be difficult to achieve. In addition to changes in the distribution of income and the conditions of employment, there must be greater flexibility in employment methods and in the structure of industry.
Meanwhile, I agree with the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) who said that something good might come out of our present difficulties. We are having to face reality in a way which the country has not had to do for a long time. There has been between workers and employers a willingness to co-operate in how to cope with a difficult situation—a willingness which perhaps we have not seen since the war. This situation has brought out a degree of native ingenuity among manufacturers and engineers of which we should take advantage.
We have, if only we can use them, great energy resources both in terms of coal and, in the future, in North Sea oil. Our agriculture, whose efficiency has been advancing greatly since the war, has an increasing contribution to play in a period in which world food prices are very much higher and will remain higher.
In the past 20 years we have had a revolution—a revolution which has not been fully recognised—in technological education and industrial training in which previously we were the most backward of the industrialised nations. We have a technical ingenuity which might now be applied to dealing, not with long-range and probably non-economic, prestigious, high technology projects, but with some


of the immediate problems that we are likely to face in terms of energy and resources in the next few years.
We can get the benefit of these resources, but I believe that we shall have to change the order of our priorities, particularly in respect of those leaving our universities. We shall have to realise that our salvation is no longer to be found in the City of London, whatever contribution it makes to our balance of payments, if our manufacturing industry remains uncompetitive. When I say "uncompetitive", I realise that manufacturing industry is competitive at the lower level at which the pound stands today—but at what cost to ourselves !
In the end we shall conquer our difficulties not by confrontation leading to the breakdown of our society and to violent revolution, whether on the right or the left—because that would be nothing but unpleasant and would lead to no solution of these problems, except a solution under authoritarian rule—but by a revolution in social attitudes appropriate to the democratic society in which we are now living.

6.2 p.m.

Mr. Kenneth Lewis: Those of us who have known the hon. Member for Edmonton (Mr. Albu) for many years appreciated his speech. We shall be very sorry, indeed, if in due course he is no longer with us. As I am not in favour of a General Election at this time, I hope that he will be with us for many months to come. Therefore, I hope that the suggestion that we shall not be hearing him again will not apply for some time.
The hon. Member for Ebbw Vale (Mr. Michael Foot) began his speech with some reasonably restrained comments about the miners whom he knows very well since he represents them so effectively. I thought that today the hon. Gentleman was at his most scintillating, and we greatly enjoyed his remarks. When I looked at the title of the motion that is now before the House, I came to the conclusion at the end of his speech that at any rate the hon. Gentleman had enjoyed his part of the "division" in the "divided nation".
I should like to say one or two things about the miners, since the hon. Member

for Ebbw Vale raised the subject. When the general strike took place I was only 10 years old, but I remember in the north of England going with some other boys to an old, disused pit heap and puting in a bucket pieces of old coal slate. That slate was used to feed whatever kind of fire we managed to have at home in those days.
Labour Members will remember only too well that the miners carried on their confrontation after the general strike ended. Most of them now, looking back, would admit if they take a historic view of the situation, that what happened was to their own disadvantage as well as to the disadvantage of the country. As a youth I was greatly affected by what happened following the general strike. All that resulted from that strike was that the years afterwards were arid years indeed. They were years of economic deflation and of very high unemployment ; they were years in which the miners were on very low wages and many of them had to look for jobs.

Mr. Heffer: Times have changed.

Mr. Kenneth Lewis: I agree with the hon. Member for Liverpool, Walton (Mr. Heffer) that times have changed, but history has a habit of repeating itself. We may well ponder on the fact that the miners have been offered the best deal they have ever had from any Government, including the Labour Government, and I think that they should agree to accept it. In addition to that offer, they have been told that in the new situation there will be a review of what they will get in addition in the months to come.
Certainly the experiences that I remember, flowing from the general strike, have affected me throughout my life. I believe that if the miners refuse to do what the country asks of them—quite apart from what the Government are asking them to do and the efforts of the TUC and all the rest of it—and if they do not accept this offer and go back to full-time work, they could create a situation in which the country is landed in another deflationary period as a result of which everybody will be affected. In a deflationary situation an increase in the supply of energy is not needed. In such a situation not as much coal will be needed. Therefore, the miners would put themselves in the position where


future possibilities in terms of their earnings would go out of the window.

Mr. Heffer: The hon. Gentleman surely is not suggesting by any stretch of the imagination that if the miners continue their overtime ban—because they are now working a full day—this will lead to a great world depression such as we saw in 1931? Is he suggesting that the world depression of 1931 was the result of the 1926 general strike in this country?

Mr. Lewis: I am saying that the overtime ban is creating a reduction in the production of coal tonnage and that that reduction in turn is affecting British industry. If industry is affected, we could soon be in a position of deflation and, instead of a standstill growth, we shall have a minus growth situation.

Mr. Heffer: We have got that now.

Mr. Lewis: There is no future for the miner in a run-down economy.
The hon. Member for Ebbw Vale towards the end of his speech spoke about the clash between people and Parliament. He said that this is the place where the collective wisdom of the British people has to be thrashed out in depth, and that is quite true. Let me quote an extract from the hon. Gentleman's book:
It must be made clear to everybody that there is one thing we must assent to and that is the sovereignty of Parliament over any section of the community.
As the hon. Gentleman knows, that was said by Aneurin Bevan on 9th February 1947 about the intransigent attitude of the doctors to the National Health Service Bill—

Mr. Heffer: Who challenges that?

Mr. Lewis: If it were applicable then to the doctors, it is even more applicable today to a section of the community outside this House who are themselves being divisive by refusing to arrive at an industrial agreement.
Governments of all parties have their faults. However, until about a year ago or even until six months ago this Government were providing a higher standard of living with better future prospects than any Government that we have had since the war. They have made their mistakes, and I have criticised them from time to time for their mistakes. But perhaps their

biggest mistake has been super-optimism. They were optimistic about the unions and their readiness to deal with their extremists. By and large it is not the moderates in the unions who are responsible for the present situation. It is the extremists in the unions, and it is the failure of the unions to deal with their extremists which is creating the present industrial trouble.

Mr. Ivor Richard: I come from a valley in South Wales, where I have spent a great deal of time in recent weeks. The hon. Gentleman is talking utter nonsense. The miners in South Wales are solidly behind the NUM executive, and no speech about reds under the bed, about militancy or about the sovereignty of Parliament will change that central fact.

Mr. Lewis: The hon. and learned Member for Barons Court (Mr. Richard) is entitled to express that view. I say only that those who are on union executives from time to time have to give a lead. It is clear that they have a duty to give a lead. It is clear also in the case of the NUM that they are being prevented from doing so by one or two extreme elements on the executive.
My right hon. and hon. Friends have been optimistic also about the readiness of the Opposition to co-operate in the national interest. The hon. Member for Edmonton made some reference to this. How many speeches have we heard from the Leader of the Opposition trying to assist the Government? In the situation last year when we had a strike and in the situation that has arisen this year, how many speeches have been made by Opposition Front Bench spokesmen in support of commuters who in the past few weeks have had hell knocked out of them? I refer to those members of the general public who want to go to work, even if it is just to work a three-day week, and who cannot get to work because there is a dispute between unions which has nothing to do with the Government and nothing to do with the British Railways Board but which is a battle between some unions. It has been going on for weeks. How much support have we had in the national interest from the Opposition? There has been hardly any support from them.

Mr. Harry Ewing: It is unfair to misrepresent my


right hon. Friend the Leader of the Opposition. Does the hon. Member for Rutland and Stamford (Mr. Kenneth Lewis) conveniently forget that my right hon. Friend is the only right hon. or hon. Member of this House to ask ASLEF to go back to full working?

Mr. Lewis: I do not think that the right hon. Gentleman said it strongly in this House. He must have said it privately. It is a pity that he did not tell the public more strongly that he had done that. Perhaps he would have been more effective if he had done so.
My right hon. and hon. Friends have also been somewhat optimistic about the likely stability of world prices and world interest rates. In this respect they have been more unlucky than any Government since the war. If right hon. and hon. Members examine all the figures they will find that the major price increases that have occurred in this country over the past 18 months have been largely due to the rise in world commodity prices, added to the kind of inflation that we were also getting as a result of one or two over-large wage awards two years ago. Had it not been for the prices and incomes policy, inflation would have been greater.
But the recent increase in world oil prices, which has nothing to do with any Government, is an indication that the expectations of the Western world are now the expectations that other countries which are producers of commodities have taken unto themselves. They, too, want rising standards of living, and we have to be prepared to pay the price.
Despite all the Government's earlier optimism and despite the apparent pessimism which abounds now, I still believe that my right hon. and hon. Friends are justified in continuing to be optimistic. I am optimistic. I believe that if we can settle our present difficulty and if we can carry on governing the country for the next 18 months, we have still an opportunity to provide a better society and to retain what is and always has been the best society in the world. We can still raise our standard of living and we can maintain the full employment which has been achieved under this Government.
Implicit in the Opposition's motion is that nothing has been done to provide for a more even society. Over the past two years, however, there have been

various meetings between the TUC and the Prime Minister and other Ministers. At each of those meetings the TUC has asked the Government to adopt certain policies which it has felt to be necessary in the national interest. The TUC asked for more for the old-age pensioners. The Government gave more to the old-age pensioners. The TUC urged the Prime Minister to continue a policy of growth. The Prime Minister and the Chancellor of the Exchequer pursued a policy of growth. If they are in difficulty and are having to cut back growth now, at least they took every opportunity possible to provide the growth for which the CBI, the TUC and the Opposition were asking. The Opposition asked that something should be done about the regions. The Government have put more money into the regions than any other previous. Government. The Opposition asked for family income supplement—

Mrs. Renée Short: No. Government supporters asked for that.

Mr. Lewis: The TUC asked for an increase for lower-paid wage earners. In order to provide that increase the Government created family income supplement, and they were given it. The Opposition pressed for a reduction in unemployment which at one time was running at a million. The Government's policy was geared to bringing down unemployment. One has to ask, "How much have we got to give? When will the Opposition be satisfied?"

Mr. William Hamilton: When you are out of office.

Mr. Lewis: The hon. Member has laid it on the table ; I hope that my right hon. Friends will take note.
There is nothing that we give for the sake of giving, no Danegeld for the Opposition that they will not throw back in our faces. We have given what we have because we think it is right in the interest of the country. We intend to stay here and govern and hon. Members opposite will have the opportunity in due course to go to the country, after we have sought to implement our policies.
I said that I was an optimist. I do not believe that we have a divided nation. I believe that most people accept that the rich are taxed very highly, and


that is right. I believe that people also accept that they have had it very good in recent years. They are ready to give something up in the national interest. I hope that what the people are ready to give up in the national interest will be appreciated by the Labour Party and that they and their friends will also be prepared to give something up and cooperate in the national interest.

6 21 p.m.

Mrs. Renée Short: I am always amazed when Conservative Members give us their view of the economic situation and carefully forget to mention certain basic factors which are responsible for our present position. The hon. Member for Rutland and Stamford (Mr. Kenneth Lewis) said not a word about the fall in the value of the pound or about the appalling number of price increases—12,000 last year—in food and many other things that people have to buy daily, which, according to him, ordinary people, trade unionists, miners and their wives, all have to accept. He said not a word about the enormous amount added to our balance of payments deficit by our entry to the Common Market—over £1,000 million in the last year.
The hon. Member said not a word about all these things, which add up to the burden placed on ordinary people. When he says that the people should say what they are prepared to give, one is forced to ask what more he expects them to give. In our view, they are giving too much in their standard of living and that of their families. When the trade unionists, the miners, the railwaymen, the ambulance men, the hospital workers and others ask for a better share of the national wealth which they create, directly or indirectly, they are only asking for something to help them maintain the standard of living of their families. That is surely a reasonable request.
We have just lived through a terribly traumatic week, with everybody waiting on what was going to happen. Which way would the Prime Minister jump? Would he have the courage to go to the country, or would he vacillate and then decide he could not do it? There were clear indications of division in the Cabinet. The hawks were giving him advice against the background of the

outpourings of some Sunday columnists, one of whom was mentioned by my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot). I hope that future prognostications from that writer will be taken with many pinches of salt, because they invariably prove to be wrong.
The Prime Minister and some of his colleagues have done their best to divide the unions, to alienate union members from their leadership—that is the game the hon. Member for Rutland and Stamford was playing—and also to sow suspicion of the unions among the population at large. But they have failed completely. The working people of this country, I believe, are more united today than they have been for a long time. When I say "working people" I am thinking not only of skilled and unskilled factory workers but also of management and such people as journalists who have written this stuff in the papers about us and the Government. They are all working people.
The miners have been put up by all those people, notably by the Prime Minister and some members of the Cabinet and by all the other members of the Conservative Party, as dangerous and irresponsible men holding the country to ransom in their greed. In fact, the miners have won the sympathy of all decent, reasonable people. Now that the facts have been disclosed about their pay and conditions, people regard it as a major scandal of our unequal and unfair society that men should work in daily risk of their lives and health in cramped conditions in the depths of the earth to bring up coal that others burn without a thought for those who, for so little reward, dug it out.
The Prime Minister is always telling us what enormous increases have been offered to the miners, which they have turned down and for which they have shown such a lack of gratitude. But the miner at the coal face, who is the highest paid member of the NUM, gets £36·79 a week, which the National Coal Board offer would bring up to only £39·29. The NUM claim submitted in September 1973 would give them £45 a week. Girl secretaries and personal assistants working in London get that amount of money now, yet the Government are not prepared to accept what all of us on this side regard as a fair and reasonable claim.
An exercise just carried out by Professor Pearce of Southampton has shown that if all the wealth of the nation were divided among everyone, each one would get £4,000 a year. The miners would be laughing with that, and so would we ; we would all be better off.
The miners know the hard facts of life as well as anyone else. Like the Secretary of State for Social Services, presumably, they read the article yesterday in the Press by Professor Day, but perhaps, unlike the right hon. Gentleman, they got the gist of his message. They know that 15 per cent. of the population own 84 per cent. of the nation's wealth, or, put the other way round, that 85 per cent. of the population share only 16 per cent. of the nation's wealth. That is what the argument is about. There can be no claim of equality in the rewards given for a fair week's work, nor can there be recognition of the fact that some people have more dangerous, difficult or vital work to do, when working people see gross inequality like that.
The 85 per cent. who share such a small proportion of our national wealth include people worth £10,000 a year, so it is a very broad cross-section of society. It includes many people in management and professional people like journalists, doctors and lawyers. Large numbers of people are all in this situation together. The very top stratum of society, the "five-star" people worth £300,000 a year and more each, make up only 0·1 per cent. of the total, but they own 6·8 per cent. of the nation's wealth. These are the people, as Professor Day pointed out, who make their money largely from land and property. People know that. They had a reminder only yesterday in the demonstration outside Centre Point.
How does the Prime Minister expect miners, railwaymen or any group of work people to react when they see this inequality demonstrated day after day? How does the right hon. Gentleman expect the miners to react when they know that their claim adds up to no more than one man has been able to make in increased capital gains on one building by keeping it empty since it was completed?
I spent the whole of the week before last visiting some of the largest firms in my constituency to find out what effect the Prime Minister's lock-out was having

on industry. I have written to the right hon. Gentleman describing the despair which he has caused to both workers and management by his unprecedented decision, which was taken without any consultation either with the CBI or with the TUC and without any warning, to impose a three-day week. His further statement that he would be prepared to carry on to the spring with three-day working was met in my constituency with utter disbelief and a great deal of anger.
Many firms, certainly all the small and many medium-sized ones, would not be able to carry on to the spring. They would go out of business. Even large companies backed by considerable resources would find it difficult. The abrasive words words Mr. Campbell Adamson used the week before last were different from those used in the speeches which he is making today. Now he is demanding a fairer society and fairer shares. In today's Evening Standard he urges employers to join the unions—an unprecedented call from the Director-General of the CBI—in calling for a fairer society with a better distribution of wealth and incomes. He adds:
I think we should now start seriously talking about a better distribution … of wealth to show that we understand the sort of situation in the country.
Mr. Campbell Adamson has clearly had it brought home to him, probably by employers in the West Midlands, that the situation is reaching a dangerous state. Perhaps he will be encouraging some of his members to send some of their cheques to the Labour Party in future instead of making contributions to the Conservative Party, who have not delivered the goods.
In the West Midlands all our industries depend on steel and our foundries depend on pig iron. With these in short supply it means that firms will not be able to carry on much longer. Even if the steel industry goes back to four-day working it still means that it will not be able to supply the needs of a large numbers of engineering firms in the West Midlands. Many thousands of workers are now unemployed in Wolverhampton, many thousands more will be unemployed unless the ban on short time working is lifted. Export orders are being lost. Once these orders are lost and picked up willingly by other countries they cannot be won back again quickly. The fall-off


in demand on the home market will quickly lead to a 1926-type situation unless the Government come to their senses and restore full-time working.
My constituents working in factories and foundries have suffered a drastic cut in their take-home pay. Unskilled workers are losing £10 a week ; skilled workers are losing between £15 and £20 a week. But managing directors, too, are fearful of what the future holds if this situation continues because, if works close, their jobs go and they, too, have the problem of mortgage repayments and regular outgoings which have to be met, while skilled and unskilled workers in industry may well find it easier to get jobs once employment picks up again. It is not so easy for management, nor for older men. So there is a great deal of concern and I hope that the Prime Minister will take the message. Many people are expressing concern and anger at the way in which the whole business of the power cuts has been organised. They feel bitter that nonessential users are apparently able to go on using electricity while industry is on short time.
The Minister of Transport is telling local authorities to cut back on street lighting, thereby increasing danger and risk of life and limb. I hope local authorities will resist this kind of advice from the Minister.
The three-day working is an abomination. The Prime Minister must have taken leave of his senses to decide that he could bludgeon public opinion by using a weapon of this kind.
The TUC has shown enormous patience in discussing with the Government and the Prime Minister over and over again the proposals which it is prepared to make and the undertakings which it has given on behalf of 100 unions in this country. What more does the Government want from the trade unions? If the Prime Minister would only pluck up the courage and go to the country I believe that a Labour Government would be returned. We should then be able to show who the country is being governed for and should be able to implement the policies that have been spelled out by my right hon. Friend the Leader of the Opposition, which would create the kind of climate which I believe would bring forward a social contract that is essential

if we are to carry the trade unions with us. I hope that that will be the message from the House tonight.

6.37 p.m.

Mr. Churchill: No one has greater command of eloquent banter and bluster in this House than the hon. Member for Ebbw Vale (Mr. Michael Foot). Indeed, so skilful is he in this art that he held the attention of the House for 35 minutes without a note, without a constructive suggestion, and without a single reference to the motion.
It is true that he uttered some predictable and outdated nostrums on class warfare, but even he must beware at this point: some of his fellow Socialists are threatening a McCarthy-type purge of non-working-class elements in the ranks of the Labour Party, and while the credentials of his right hon. Friend the hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) may be impeccable, those of the hon. Member for Ebbw Vale appear to be sadly lacking.
I certainly wish to go on record with the noble Lord, Lord Kearton, who yesterday said that he would be opposed to any such nonsense as the hounding out of Labour Party politics of the hon. Gentleman. Certainly it would be a great loss to the House to which the hon. Member adds so much sparkle.
The hon. Member advances the laws of supply and demand in aid of the miners' present case. Some of my hon. Friends may think that that is a novel policy for a Socialist to sanctify. Indeed it is not, at least, not in regard to the miners. During the last Labour Government, the miners suffered from that policy with a vengeance. Supplies of coal were not much in demand and the Government of the day preferred to increase our national dependence on cheap imported Arab oil at the expense of the British mineworkers.
It is the humbug at the heart of the Opposition's case that they priced 35,000 miners a year out of the industry and increased their weekly pay by only £4 in six years. It has taken a Conservative Government to call a halt to this disastrous decline. In three and a half years of Conservative government miners' wages have increased by £17 a week, including the present claim. The Conservative Government have invested some


£1,100 million in the future of the coal industry.
To be fair to the hon. Member for Ebbw Vale, he went out of his way to dissociate himself from his leader's policy when he was in government and, indeed, from the policy of the entire Front Bench of the Labour Government, including the right hon. Member for Bristol, South-East (Mr. Benn), who now makes such great speeches in support of the miners. How is it that the Labour Party has suddenly discovered that mining is a dirty and a dangerous occupation? From where does it find the impudence to attack the Government who have given the miners a better deal in three and a half years than the Labour Party did in more than six years? Is it not their belated feeling of guilt about the way in which they abused this community that forms such a vital part of the national backbone and heart of our country?

Mr. John Smith: The hon. Gentleman is criticising the Labour Government for its energy policy. What comment has he to make on the fact that at that time the present Prime Minister was urging the Labour Government to close even more pits?

Mr. Churchill: I think that one can judge by performance, and the performance of the present Government and the present Prime Minister has been infinitely more beneficial to the men who work in the pits than was that of the Labour Prime Minister.
This debate is not specifically about the miners' case ; it is above all about fairness. We hear much from the Opposition today about the wickedness of the property developers ; how come that Centre Point stood empty for six years and none of this righteous indignation ever bubbled to the surface in the speeches of Labour Members during all those years? In every field today the Opposition seek to hide their lack of policy and their lack of unity with humbug.
The British people, fortunately, are not so facile as the Opposition would have us believe. They resent the way in which the Leader of the Opposition plays politics in a time of national crisis. They remember the showdown that the right hon. Gentleman the Leader of the Opposition sought with the unions while in

office. They remember how, when it came to the crunch, he ran away. They recognise that that capitulation by a democratic Government to a sectional interest in large measure has been responsible for the situation in which we now find ourselves.
The British people are fed up with being made the whipping boy of sectional interests which every winter come to burden them with more inconvenience and more threats to the national livelihood and the future of many people. The nation is more united than it ever has been in opposition to these recurrent demands by powerful sectional interests that seek to bludgeon successive Governments, using the public as the whipping boy. The nation is even more united in its determination to prevent those who do that for party political motives.
The present dispute is not by any means solely about pay, or perhaps not even primarily about pay, or even, in the case of the ASLEF dispute, about differentials ; it is about the openly avowed determination of certain members of the NUM leadership—to use their own words—"to smash the Government". I am glad that there are still some members of the Opposition who, as social democrats and constitutionalists in the Labour Party, have the courage to stand up and denounce those who, with no mandate from their union membership, seek to play politics, as certain members of the NUM do.
In past years the Leader of the Opposition has spoken in uncompromising terms of the Communist minority in the ranks of the unions. It is a pity that his voice is so muted today. Perhaps he would be in danger of being accused of statesmanship. It is becoming fashionable in the Press to dismiss such talk—and it is talk that has come before now from the Opposition benches, as well—with the outdated cliché, "Reds under the bed". Indeed it is dated, for one needs to look for them these days in Rolls-Royces hired at £180 a day at the expense of union dues.
The offer to the miners is fair, and moderate trade unionists recognise that stage 3 is fair. That is why more than four million have settled under stage 3 and men like Tom Jackson have made it clear that if the Government's pay policy were to be bulldozed by sectional


interests, it would be the smaller unions and individual working people, not to say pensioners and others on fixed incomes, who would suffer.
The Government are making a stand on behalf of the whole community to protect all the people from the ravages of even greater inflation than has been imposed on us by the increase in world prices and to make a stand against the bully boys of the sectional interests that seek to bludgeon the community into submission. The people are looking to the Government to stand firm and, above all, to maintain the constitutional authority of a democratically elected Government.

6.47 p.m.

Mr. John Smith: Throughout the debate it has been obvious that Tory Members are not sure whether there is to be an election. Plainly, they wrote their election speeches last weekend and some, like the hon. Member for Stretford (Mr. Churchill), have produced them today, while others have decided that an election is still a little way away and that they had better try the art of conciliation and make moderate speeches that will appeal to the nation.
The hon. Member for Stretford made a party-political partisan attack on the mythical influence of Communists in the National Union of Mineworkers. I say "mythical" because of one simple fact. Last week, I went to two collieries in my constituency and spoke to people there. There are few members of the Communist Party in those branches. Among the membership of the National Union of Mineworkers will be found all sorts of political opinion, including Conservative as well as Communists, and all are behind the miners' claim and solidly behind the overtime ban.
That does not seem to have got through to Tory Members, who believe that the miners are stupid sheep led by a few rabid militants and unable to make up their own minds about the merits of their own claim. They should come to mining areas and talk to ordinary miners, who will tell them that they are 100 per cent. behind the ban. That would teach them the lesson that they have to learn about the mineworkers.
We remember that one of the first exercises of the Industrial Relations Act was to hold a ballot to find whether the membership supported the leadership of the National Union of Railwaymen, and the Government got the resounding result that the membership fully supported the leadership. It is sometimes necessary for Tory Members not to get carried away too much by partisan theories about the influence of Communists in industrial disputes and, instead, to look at the facts of the position.
Another important fact about the miners' dispute is that it is not a challenge to the sovereignty of Parliament. It is not a challenge to the sovereignty of Parliament to refuse to work overtime. This country would be in a sorry position if there were a parliamentary or any other method of forcing men to work compulsory overtime against their will. That is all that they are refusing to do. It is a normal industrial dispute in which employers and employees—and in this case the Government—are disagreeing about what ought to be a proper pay offer to the industry.
While talking about the miners' dispute I wish to bring to the Government's attention the fact that many people in the industry do not understand the basis upon which the pay offer has been constructed. For example, a worker at the coal face on the day shift would receive £2·56 extra per week, but on the night shift he would get a larger increase of, I think, £8 per week. No one I met at the coal face or among surface workers or management could understand why there was this difference. There may be a case for an unsocial hours provision in the case of London Transport but it does not make any sense in the mining industry.
Many mineworkers told me that they were working on night shift from choice. None on the night shift or the day shift could understand why he would be paid so much for night shift working.

The Secretary of State for the Home Department (Mr. Robert Carr): I am sure that the hon. Gentleman would wish to be fair. I presume he knows the position, but if not I shall remind him. The National Coal Board has made clear that the £45 million cost of the total offer could be redistributed in any way


which the National Union of Mine-workers likes. At no time have conditions been imposed on the way in which the offer is to be distributed.

Mr. Smith: It is high time that fruitful discussions were started on that point, involving the NUM, the Coal Board and the Government. An initiative should be taken on the point which the right hon. Gentleman has just mentioned. It does not make much sense at the moment that there should be extra money for unsocial hours. It is unsocial for a mineworker to get up at 4.30 in the morning to get a bus for a day shift starting at 7 o'clock in the mines.
We need a constructive way out of the dispute. The machinery exists through the offer from the TUC and it should be possible to find a way out. There is no way out of the dispute except by frank and real negotiations between the parties. It is no way out to accuse one side of assaulting the sovereignty of Parliament when it is doing nothing of the kind. To accuse them of assaulting the nation, as the hon. Member for Stretford did, does nothing to solve the dispute.
It must be obvious to everyone in the House that we live in a divided society. It is divided socially, in class terms, and in financial terms. What troubles me most—and this is the most difficult point—is that it is divided in industrial terms, and because of this the economy suffers badly.
The Secretary of State for Social Services more or less put his finger on the point when discussing Britain's economic problem and the difficulty in industrial relations. There is, indeed, difficulty in industrial relations. There is a particularly bad atmosphere in industrial relations at the moment. How has it come about? We must seek ways to solve the problem as constructively as we can, but let us remember who is responsible for the present state of affairs. The Industrial Relations Act has done more harm to industrial relations than has any other single Act this century. It has caused deep bitterness between trade unions, the Government, and industry itself. The Act lies like a deserted hulk on a beach after the tide of events has run out and left it.
If any employer, or individual moved to use the Industrial Relations Act there

would be a shiver of fear through the whole Government, because they know that the Act caused the dock strike and trouble from which they had to be rescued by the Official Solicitor in a curious sequence of events. The Act is wholly irrelevant to any constructive solution to industrial relations in Britain. It has done great harm.
When the Government swept away the Prices and Incomes Board they threw away a useful weapon with which to try to find the solution to difficult problems of relative pay structures in industry. They know that the policy they followed for a while—lame duck policy—caused throughout the country a fear about job security which will not completely vanish until there is a change of policy. Government policies on cutting welfare services and increasing rents caused a great deal of bitterness among ordinary workers who are asked to adopt the posture of restraint for the national interest in the midst of steeply increasing prices and rents. That is the atmosphere which has been created not by accident or world events, or through something outwith Government control, but to a large extent by deliberate acts of policy in which the Government have been involved.
I hold the Government to account to a great extent for the state of industrial relations in this country. We must do a lot better to try to obtain a more sensible and ordered system of industrial relations. We must decide that compulsion is out. It is not possible to draft an Act of Parliament or create a court or some other machinery to enforce good industrial relations. It cannot be done. I hope that the Government party and other political parties have learnt the lesson from this Government.
I am constantly amazed at the rudimentary and accidental way in which industrial disputes are resolved in this country. There was an example of this in my constituency two years ago. The management of a firm telephoned to ask me if I could help it as it had a strike which had continued for three weeks and was causing doubt about the future of the plant. I telephoned the local trade union organiser, whom I knew, and asked if I could help. He said he thought that a meeting would be useful. A meeting


was organised for the following day at the offices of the firm.
Personal relationships between the union and management were obviously bad and deeply soured by the way in which the dispute had been conducted by both sides. After an initial flurry, it was decided to get down to negotiations. I acted as chairman and I arranged for each side to have discussions with one another and then individually. As a result, after six hours an agreement was reached on what should be the future pay structure for the firm for the following two years.
I do not claim any particular credit for helping to solve that dispute. What struck me about it was that it was purely accidental that there happened to be available someone in whom both sides had confidence, for one reason or another. I asked the management why it had not approached the Department of Employment for assistance. The management indicated in fairly rude language that the Department of Employment had not been very helpful.
That incident has driven home to me the hopelessness of many of our ways of solving industrial disputes and has persuaded me of the absolute necessity for a system of conciliation and arbitration for settling disputes. The settling of disputes should not depend on the accident of the good offices of someone who happens to be available at a particular time. Goodness knows, that strike may have continued for week after week with neither side wanting it to continue.
The truth is that ordinary working people in Britain do not want industrial trouble. They do not want to work in an atmosphere of industrial strife and bitterness. On the whole, they want to get on with the job. That is the overwhelming feeling of ordinary working people.
I draw the attention of the House to some of the policies that we ought to be pursuing to obtain good industrial relations. First, we must scrap the Industrial Relations Act completely. The Government should not let pride or vanity stand in their way. It is as plain as a pikestaff that neither the Government nor management, nor anyone on the trade union side will use that Act. It should be cleared from the table and

we should get down to producing a new structure. The Department of Employment should be given extra encouragement to develop an arbitration and conciliation service.
Next, I draw the attention of the House to "Labour's Programme 1973", which defines in some detail a conciliation and arbitration service. It makes it clear that the next Labour Government will immediately establish a publicly-funded nongovernmental conciliation and arbitration service
to provide speedy help in reaching settlements and in minimising the likelihood of industrial disputes. … To be governed by a Council drawn from employers, trade unionists and people with industrial relations experience".
It must be obvious that it would be in the public interest for such a body to be set up and to acquire expertise in the handling of industrial disputes by firmness. It would make it much easier for both sides to put their disputes to it for settlement.
I noticed in yesterday's Sunday Times Business News very interesting comments about the need for more facts in the settlement of industrial disputes and for fact-finding services which would make the real facts clear to both sides of industry, the Government and the public. We must have machinery to try to avoid misunderstanding and to cut down unnecessary conflict in industry.
I am not one of those who believe that the clash of interest between workers and management, which is an essential part of British industry, can be suddenly changed. I do not believe that we should pretend that it can be so changed, for all that would be produced quickly would be spurious unity. There are obvious clashes of interest between workers, shareholders and management. There will always be some clashes of interest in any society which has some spirit and where there are individual disagreements between management and the shop floor. It would not be a very happy society if we all went to work like sheep, did what we were told without question, and never said a rude word to anybody. I do not want that kind of society and I do not think that anyone with any sense of human values wants to see the kind of situation in which all workers must unthinkingly do what they are told by an omniscient and omnipotent society.
However, what we can seek to do is to cut down the area of dispute. Seeking ways of avoiding disputes which arise from misunderstanding, setting up machinery to deal with disputes which are susceptible of conciliation and arbitration, and trying to encourage the adoption of methods of settling disputes that exist in many industries, are worth-while areas to explore. For example, we seldom hear of disputes leading to strikes in the steel industry. Over the years they have built up the habit of dealing with things in a conciliatory manner.
We need two prongs of attack. First, the Government should pursue policies which move steadily towards a fair society. Secondly, the ordinary worker who is asked to show some restraint in presenting and prosecuting a wage claim must see that such restraint is being observed by others as well. This means that people such as property speculators should not be allowed to flourish in a society where men such as coal miners, working in extreme dirt, danger and difficulty are required to make a sacrifice. So we must be seen to be moving towards a society in which fair social policies, fair taxation policies, and fair industrial relations policies are operated. I believe that then we may well see the way out of our difficulties.
I hope that one of the things that the Labour Government will do when returned will be to set up a conciliation and arbitration service. That will be a mark of the progress they intend to make in industrial relations, just as much as the Industrial Relations Act has been the mark of the failure in industrial relations of this Government.
It will not do to fight an election or to frame a policy based upon a conflict in British industry. The party which I hope will win the next election ought to follow a policy of conciliation which is sincerely meant, not only in the Government's approach to society but in the way in which industry itself conducts its affairs.

7.3 p.m.

Mr. Norman Tebbit: The motion is entitled, "The Divided Nation". Speaker after speaker has asked himself whether the nation is indeed divided.
Divisions there will always be. Apart from the inevitable divisions of age and ability, which will always be with us, there are clearly divisions of wealth and class, as there are in Eastern Europe, Cuba, and similar countries, who show no signs of losing them. I believe, as my right hon. Friend the Secretary of State for Social Services believes, that within the limits of decency itself, divisions, inequalities in wealth, and, indeed, even in class—whatever that means—are not harmful. Tonight we shall have our Division at ten o'clock. It will not harm us so long as what we have in common in the very fabric of this place is more important than the issue over which we solemnly go through opposite Lobbies.
So we have to ask: are we anywhere near that point where our common interests can be over-ridden by the divisions which are between us? Before we even look to answer that question, we should look at the consequences if we come to the conclusion that we are. Apart from anything else, the lesson of Ireland is there for us to see. One part of that lesson should surely be that we should never say, "It cannot happen here." All of us who have been to Ireland have seen what can happen when things get out of control. The denim-trousered, bovver-booted thugs of the so-called Loyalists, who hold up the traffic while the police and the Army would prefer not to know ; the IRA men torturing, murdering, beating up innocent men and women, blackmailing businesses, threatening to put men out of work—those people are the material for our Gestapo, for our Brown Shirts, for our SS men, if we ever wanted to recruit them.
They destroy the great myth that Britain is a democracy by divine intent and can never be anything else. We are not that much different from the Germans who, in the wake of military defeat and economic disaster, turned to Nazism, or indeed the Poles, the Czechs, and the Hungarians, who fell victims to Red Fascism 25 years afterwards.
The lesson of Ireland and the lesson of what has happened in the last 50 years in Europe must be that if a section of the community believes that it has a right to use force, to over-ride the law, to use blackmail, to use violence, to set itself


above any other section of the community, the progress to the gunman in the alley and to the tank on the street corner can be swift. It can be from rent strike to gun law in 36 easy monthly instalments, because that it is what it is in Ulster.
I quote from no blood-curdling Right-wing Tory journal but the current issue of the Local Government Chronicle: "The party"—it speaks of the Labour Party—
is aligning itself with law-breakers and if there is an early election this could add one more nasty ingredient"—
[Interruption.] If the hon. Member for Wolverhampton, North-East (Mrs. Renée Short) would be quiet, as I was quiet during her speech, I should be obliged. If she wants to read the rest of this quotation she can do so in the Library, later. I continue reading:
… this could add one more nasty ingredient to what already promises to be one of the bitterest fights of recent times.
I make it clear that this is not an allusion to the miners.
Unless the Labour Party abandons its support of those who seek to attain their ends by illegal methods, it will lay itself open to devastating, and justifiable, attacks from its opponents on the grounds that it is succumbing to the blandishments of extremists.
It will also forfeit the right to expect that future Labour legislation will be implemented by Conservative-controlled councils.

Mr. William Hamilton: Will the hon. Gentleman give way?

Mr. Tebbit: I would rather not, least of all to the hon. Gentleman.
I think that that last sentence is quite the gloomiest that I have ever read in a responsible journal. It contains within it the same utter despair that has given the so-called Loyalists the power to use arms illegally in the name of the law in Ulster. [Interruption.] If the hon. Member for West Ham, North (Mr. Arthur Lewis) wants to natter to his friends, I shall be obliged if he will go outside to do it.
In the present situation in this country, the blame is no more all on one side than it was in Ulster. But the divide is opening between us—the divide between those who would work within the law and those who are prepared to work outside it.
However strongly we may hold our opinions, or however far we are to the

wings of our parties in some of those opinions, it is for us to bridge that gap before it becomes too deep and too wide to cross. Those of us who are constitutionalists, which is clearly the vast mass of us, cannot allow any one of our fellow constitutionalists to become cut off without a bridge—to be cut off and isolated among the extremists and the apostles of force.
The danger today—the Local Government Chronicle sees it, too—is clearly greatest for the Labour Party, but there is no guarantee that the same danger will not afflict my own party at some time in the future. We have to ask ourselves, therefore, how we can build the bridges—bridges which can be used, and are not just part of some war of words.
First, I implore the Opposition not to ask of us that which we clearly cannot give, for such is merely part of a war of words which gets us nowhere. We cannot give way on stage 3.

Mr. Arthur Lewis: What is the betting? That was said about Wilberforce.

Mr. Tebbit: If we give way on stage 3, we defeat not only my right hon. and hon. Friends on the Front Bench ; we defeat every leader of a trade union which has settled within stage 3 already, and we throw him to the wolves. Let right hon. and hon. Members opposite think deeply about that.
I and a good many of my hon. Friends who are opposed in principle to statutory policies—[Interruption.] I should prefer hon. Members not to laugh about these matters. I repeat that we are opposed in principle to statutory policies, as is my right hon. Friend the Secretary of State for Social Services. We regard statutory policies only as second best. But we all believe that it would be utter folly now to give way. We cannot do it. Nor, if there were one, could a Labour Government give way in these circumstances and survive. They did give way, and they did not survive.
On our side, we must not ask the TUC to do what it manifestly cannot do, which is to promise on behalf of its membership that it will enforce stage 3. It cannot. It is not its job, and we should not ask it to. But what we should do is to ask it to use all its influence to


impress upon the miners, or any others, the folly and the danger of driving full tilt into a collision with Government and Parliament, and all that for which it stands.
Also, we can ask the right hon. Gentleman the Leader of the Opposition to think again, to remember that it is just possible that he could one day be Prime Minister, and to try to behave as though he thought that it really might happen to him. Then, the right hon. Gentleman, strengthened by moderation on the part of the TUC and the undoubted skill of Len Murray, should be able to ask the miners to accept what is on offer and to come back into talks with the Government and the National Coal Board on the future structure of the industry. I suspect that the right hon. Gentleman will refuse to countenance that, but I am sure that in time to come he will bitterly regret that he did refuse.
We must all accept, on whichever side we sit, that when a quarter of the workers are employed in the public sector, the old laws of supply and demand, so glibly talked about today, do not work in terms of an incomes policy. They cannot. The old sanction that the company would go bust if it were pushed too far has gone. Everybody knows that, at the end of the day, a claim pushed far enough in the public sector is a confrontation with the Government. To pretend otherwise is a deceit, and it was practised today when hon. Members talked about the law of supply and demand governing the wages of miners. That is not the talk we heard about the regional employment premium. Where was the talk of supply and demand on that subject? Where was the talk of supply and demand when it was money for Upper Clyde Shipbuilders?
We should, however, ask the TUC and the CBI to discuss again with the Government, in the light of things as they are, and in a much darker year than last year, whether there can be agreement at least about methods, if not about numbers, in solving disputes and wage bargaining in the public sector.
I feel that it would be meet and proper if, in the meantime, my right hon. Friends could give up one or two of their public displays of heroic self-sacrifice, such as brushing their teeth in the dark and asking their wives to wash up by hand, and

turn themselves to spelling out a little more clearly the hard fact that if the price of oil imports goes up by £600 million a year it can mean nothing for this country but that every wage earner has to have 50p a week less or every man, woman and child about 20p less in his or her standard of living.
My hon. Friends might say something, too, about the price of coal—the true price of coal—adding in the deficit, comparing it even then with the exorbitant price of oil, and seeing just where the balance lies.
It is time that we on the Government side did some bridge building by acknowledging that capitalism, if it is to survive, must undergo some major changes. Capitalism is unrivalled in the production of wealth, as even Dr. Castro now has to admit in Cuba. We cannot afford to chuck it away. But we cannot persist with the notion that the man who has worked for a company for perhaps 20 years, whose savings are in the pension fund, who has built his life around the factory at the end of the road, whose chances of finding another employer are probably thin, and who has served his company faithfully, is not a member of that company, while the man who, without seeing or knowing the company or knowing the product, but thinking that it might be good for a take-over bid, rings his broker and buys some shares, is a member of the company
That cannot be right. If it ever was right, it cannot be right now. The idea goes back to the transition from the individually-owned mill to the beginnings of the limited liability company. That was the day when Bloggs owned Bloggs mill. But now it is Bloggs Mill (International) Incorporated, managed by directors who have little direct financial stake in it, and owned by institutional shareholders, including the National Coal Board Pension Fund, the Prudential, and perhaps even that dreaded ogre company, Slater Walker. It must change. It is capable of change.
An equity holding in the company will have to be granted as of right to the employees as well as to the investors, and I believe that the employees have a right to representation on the board and at the annual general meeting of the company. They have a right to that without being


put in the position of the men at Rolls-Royce who had to put both the egg of their job and the egg of their investment savings into the same basket by buying ordinary shares.
The gulf between managers, employees and owners has to be closed. However much Labour Members may have liked what I said just now they will not like this: it will have to be done outside the normal net of trade union negotiating contacts, because the two are about different things.
Many Labour Members will have disliked much that I have said today. Many of my hon. Friends will probably think that I have taken leave of my Right-wing senses and gone Lefty-trendy. But it is long overdue for us to listen to what we do not want to hear instead of perpetually shouting at each other what we think our electors might this week think they want to hear, or what we think it would be good for each other to shout. This country needs a bit more listening and a bit more honest bridge building between those of us who see the dangers that could be here before the close of this year.

7.22 p.m.

Mr. Alexander W. Lyon: The hon. Member for Epping (Mr. Tebbit) sought in his speech to try to attain a level of statesmanship but he managed for most of it merely to remain the party political hack that he has been since he came to this House. We had to listen to the nauseating humbug he was preaching as if he were the Almighty and it was almost possible to forget that he is a representative of that airline pilots' association which was the main cause of trying to break the Labour Government's prices and incomes policy in 1969. He seeks to preach conciliation when he represents a section of working people who at that time tried to seize for themselves a 50 per cent. increase in their standard of living at the expense of the rest of us. To back it up they used their peculiar industrial strength in that they could go to other countries and other national airlines in order to justify it. We do not accept nauseating humbug about conciliation from the hon. Gentleman.
It was typical of the kind of approach that is adopted by the Conservatives to

the major question of the division between the various classes in the nation that the hon. Member should follow so closely after the speech by the Secretary of State for Social Services. The right hon. Gentleman said that he was throwing away his notes. He said he would speak as did my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) and that he would seek to reply to my hon. Friend. What came out was the basic essence of the Tory creature that he is. The right hon. Gentleman is the most distinguished humanitarian in the Cabinet. I give him full marks for the kind of policy he has pursued, sometimes in the teeth of opposition by colleagues in his party. But when we scratch him we find the kind of naked appeal to personal opportunism which is the hallmark of Conservative philosophy.
When the Conservatives say that we Labour Members who seek to be moderates should combine in order to quell the militants, what kind of task do they give us when they have for three years pursued the kind of hostile and reactionary policies produced by the Government? In March 1970 I was invited by the State Department to tour the United States for the obvious purpose of trying to indoctrinate me into some sympathy for the American way of life. I fear that it failed completely because in the course of a month I came to regard America as a sick society which found it almost impossible to solve its major problems.
As I went round America I kept saying to my hosts that the only way they could solve the basic problems of racial discrimination and poverty was when they, who had the richest society in the world, sought to come together as one and share what they have in a way which will allow them to meet the challenges of poverty and race.
They took it in fairly good spirit until I got to New York where in talking to the President of the New York State Council I was attacked by his secretary who had been in England. She said that the trouble with the English was that we were so complacent in our society that we had lost all the "get up and go" which provided the aggression which would permit us to solve our economic problems. It may be that both of us were right in one sense. What we in this


country need to overcome the difficulties of productivity is what the Americans call the "get up and go", but if we were to choose that in preference to the kind of thing that United States secretary suggested was complacency, I for one would be bitterly disappointed.
One of the hallmarks of our English society is that kind of tolerance which is sometimes mistaken for complacency, that kind of satisfaction with life which enables people to live together generally as one society, that kind of understanding of the difficulties that face us in different parts of our society. That is the kind of thing which in the past has enabled us to avoid some of the difficulties that have faced other countries and some of the revolutions that other countries have gone through.
In the last three years, however, we have chosen to seek to throw it away. We started with the Industrial Relations Act, we had it with the Housing Finance Act and we had it with a succession of Government decisions which were designed to implement the philosophy of the Prime Minister that what we wanted was a much more aggressive spirit, making people stand on their own feet in order to choose their own destiny. However, in that time we have thrown away that sense of tolerance and of belonging to one another that in the past was our great virtue. Now we need it. Indeed, the Prime Minister desperately needs it. He comes to the House and says that we need conciliation and an understanding that we are one nation. That is what he promised us on the steps of Downing Street in 1970, but in the interim he has done nothing to try to earn it.
What we desperately need is that sense of one society. Here I agree with the hon. Member for Epping that we are in danger of losing the most priceless possession we as legislators possess, namely an instinctive respect for the law which allows our society to progress even if substantial minorities disagree with the Government policy at any given moment. There is a rising tide of hostility not only to authority but to the concept of Government passing legislation which is inimical to the interest of the minority anxious about its fate.
But if we are to overcome that we must move with a decent respect for the interest of that minority. No one can enforce laws in this country with the police force. We do not have that sort of regime. We cannot call out the tanks or the Army to force through the regime of any Government. In the final analysis we depend upon consent, and consent is won. It is not a simple matter of getting a majority at an election. It means that the whole policy of the Government must be to create an atmosphere in which, although minorities disagree with the majority, they are at any rate prepared to give that consent because they think that in the long term it is in the interests of the country that they should do so. We now have a situation in which substantial minorities withhold that consent because they feel that society is basically unjust and unfair. Everything that has happened since 1970 has tended to reinforce that feeling.
Therefore, we must turn again. We must try to persuade those people that it is in their interests to work for one nation. Some of my hon. Friends have suggested ways. There seems to be a fair unanimity of opinion in the House.
We must obviously get rid of the Industrial Relations Act, which is a blockage in our industrial system and has no advantage. Not even Conservative Members claim for it any advantage. If it were to be forfeit, that would immeasurably improve the prospects of negotiations.
The Housing Finance Act need not be applied. There need be no increase in rents until economic conditions make it necessary. There is no philosophic reason why there should be an increase in rents, which is the attitude behind the Act.
In relation to the specific problem of the miners' claim, there is a possibility, given a fair degree of conciliation by both sides, of achieving a reasonable settlement—perhaps outside the confines of stage 3, but not markedly so—and having the rest of the settlements this winter within at any rate the general levels of stage 3.
In that kind of situation, the inflationary levels, if that is what they are, of wage settlements, would be much reduced this year. The Government could accept that they had won at least some moderation at this period. But they will not achieve that


unless they proceed with a good deal more conciliation than they have so far shown.
The worst possible aspect of the Government's attitude was shown last week, when instead of trying to settle a difficult industrial situation they were even alerting the newspapers to the prospects of an early General Election. What possible help could it have been to the Government if they had gone to the country, as they were threatening to do, and won a victory? How could they then have dealt with the alleged militants that so upset the hon. Member for Epping?
I well remember how in 1950, after the General Election in which the two Communist Members had been unseated, the Daily Worker printed a statement from the Communist Party that in future there was no virtue in trying to work through the parliamentary system, and that what the party had to do was to concentrate upon industry, seeking to infiltrate and propagate its cause in that way. Since then there has been no determined attempt by the Communist Party to win a seat here.
The same kind of situation would face those who so frighten Conservative Members, if the Labour Party did not win an election in circumstances such as those which were being engineered last week, in which the issue put to the country was that of who governs the country—Government or trade unions. There would be a bitter and hostile reaction from those who see the present Government as the most reactionary since the war, who take the view that their interests are constantly swept aside—whether Conservative Members agree with that analysis, there are certainly many in industry who take that view—when they saw that the Conservative Government had stolen a victory by engineering an election in an attempt to blame the trade unions for our economic situation.
There would be no question of placating those people thereafter. They would feel it essential to remove the Government by extra-parliamentary processes. That kind of situation would make the country ungovernable by a Government of a Right-wing complexion.
But the situation for us on the Left is also fraught with danger. I do not want

to minimise it. As a result only of the increase in oil prices we are likely to have put upon our balance of payments another £2,000 million for the same supply of oil. Added to that are the sums that will be required for the increasing price of other raw materials and food, which are becoming increasingly scarce as consumption rises all over the world far in excess of supply. I think of beef and basic raw materials such as copper and bauxite.
All the primary commodities which we have been used to having in cheap abundance are increasing in price. That is partly because standards of living in the areas where they are produced are improving ; people in those countries are eating more and using more. It is also partly because the use of such materials for industrial processes is spreading far beyond the few major industrial nations of the West to countries which are also becoming industrialised. We are in sharp competition for primary produce.
What is not gaining ground is the price of manufactured products. The terms of trade have changed, in my view irreversibly, in favour of the poorer nations which are the main producers of primary products.
I welcome that, because I have always thought it right that there should be an increasing equality between the various parts of the world as well as between the various parts of our national society. But the pace at which it will come and the difficulties it will create for us in the West are immeasurable.
We on this side of the House have always believed in equality. We have sought in all we have done to shift the balance between rich and poor in our society through the redistribution of income. We have been able to do it in acceptable political terms because each year there has been, more or less, some degree of growth. The reason we on this side have concentrated upon growth so much and wanted an even faster rate of growth is that it is easier to redistribute if there is more wealth to redistribute. If no more wealth is created in a given year, and one redistributes, one poses a serious challenge to those who have.
As the Secretary of State said in opening, if one simply takes the excess of income now available to those who pay


increased taxation at the higher end of the scale, there is a limited amount for redistribution among those lower down the scale. Therefore, redistribution to take away the poverty in our society must come not only from those with more than £10,000 a year but from the higher-paid workers, too. If that is put to them when there is no increase in wealth because the terms of trade have turned against us, and when there might even be a downturn in the total standard of living, the challenge for the Labour Party is severe.
Both to redistribute and to achieve as high a standard of growth as we are capable of in the changed economic conditions, we shall need a degree of consent from our society greater than any we have called for in the past. We cannot begin to govern in that kind of society unless we have a basically homogenous society which sees itself as one nation. The challenge for us is as great as the challenge for the Tories.
The only question is: who can create that kind of society ; who is it within our political system who seeks to bring about fair shares ; who believes that minorities must be guarded ; who believes that the wealth of the nation is earned by us all, as one community, and must be shared amongst us as one community?
In my political life there has always been only one party that has sought earnestly for that kind of approach. It is only because we believe in it—and I hope that we shall work for it, given power—that we can hope to govern this country in future. If we fail, and certainly if the Conservative Party is returned after the next General Election, the prospect for Britain is bleak indeed.

7.41 p.m.

Mr. John Stokes: I can assure the hon. Member for York (Mr. Alexander W. Lyon) that a General Election is not necessary at present. I do not believe that my right hon. Friend the Prime Minister intends to call one. I think that he is right.
The sweeping criticism of the Government which is contained in the motion offers no remedies except larger doses of Socialism. We have heard already from the hon. Member for York about some of those doses. The Labour Party's record in Government does not encourage

any confidence in their economic management. On the central theme of containing inflation at home, they seem to have nothing to suggest except rigid price control, free-for-all wage increases and a fairer distribution of wealth.
I now turn to some of the specific criticisms which are contained in the motion. Everyone agrees that the balance of payments is a most serious problem and that further action on behalf of the Government is required to get it right. Even when our exports resume, as I am sure they will, after the miners' dispute, I believe that further action will be required. Import controls may be necessary on the many luxury goods which are found entering the country—for example, Japanese colour television sets. The stores are full of foreign goods not just from the EEC but from all over the world. The fashion to buy foreign will have to be curbed, at least temporarily. Some reduction in the foreign travel allowance of £300 per head may also have to be considered. It is clear that economy in the use of oil products is here for a long time. No practical proposals should be excluded to maintain and, if possible, to improve the present value of the £ sterling.
Inflation at home needs to be tackled by further Government expenditure cuts. I mean cutting out not only big schemes, such as Maplin and the Channel Tunnel, but many smaller ones. The road programme is an obvious example. The amount of waste resulting from marginal improvements to second class roads is staggering. What is more scandalous is the extravagance of local authorities in planning to build or building new town halls, swimming baths and other public works. Such projects, however desirable, are not always essential and could now be postponed.
A further most serious cause for concern is the over-staffing and inflated salaries of the new local authorities. I feared for a long time that that would be a consequence of the changes in local government organisation. The Government must crack down on that. The creation of new posts is becoming a sort of jobs-for-the-boys racket. It is often the case that all outsiders are excluded. In any event, a strong influx of new blood into local government, such as businessmen, ex-civil servants and professional people,


would be no bad thing, and might reduce costs.
I do not believe that England is a divided nation. That is a figment of the imagination of the Left and, above all, of the intellectuals. Indeed, they try to encourage the notion so as to suit their own ends. I have been in industry since the war. I mix a great deal in factories in my constituency and in my work throughout the country. I am frequently in working men's clubs and pubs. I seldom hear the sort of talk which we have heard tonight from the hon. Member for York, who now appears to have gone.
What working men want is a good and fair wage, and regular employment. The working man compares himself with the chap next door and does not bother too much about the odd property profiteer. The notion of the class war is bogus and out of date. The old working class, as I knew it as a boy in the 1920's and as a young man in the 1930's, barely exists. The miners—quite rightly—have their own television sets and refrigerators, and they take their holidays abroad. The aristocrats no longer live in the conditions which they used to enjoy—for instance, they no longer have servants. As we well know, we are all becoming middle class. Only the Socialists refuse to face that obvious fact.

Mr. George Cunningham: Mr. George Cunningham (Islington, South-West) rose—

Mr. Stokes: The motion smacks of egalitarianism but the miners are not particularly egalitarian. They speak constantly of differentials and relativities or, in less posh language, more than the other bloke gets. They have been offered that under stage 3 if only they could see it. Their future prospects are now much better than they have ever been.

Mr. Cunningham: How much pension do they get?

Mr. Stokes: That should be dealt with. They should get more, and I hope that they will. I hope that in due course the Government will abandon stage 3 and any further stages and will return to true free collective bargaining. If that is not done, controls will get tighter until the whole of our industrial life is caught in a vice.
Two essentials are required before we can return to such freedom. They may be unpalatable to Labour Members, but they must be fair. Those people working in the public services and in the nationalised industries, which are vital to the life of the nation, must be prepared to accept some limitation of the right to strike and to go slow in return for higher earnings and greater security of employment. Because there are no normal restraints in the nationalised industries, and no fear of bankruptcy, unscrupulous unions can press as hard as they like. That situation cannot be allowed to continue.
Second, even in private enterprise firms the balance is still too unfairly tilted against the employer because of the state of benefits available to strikers and their families. No other nation of which I know gives these handouts to the extent that we do, and it is only common sense to curb them. It must be made more profitable to work than to be unemployed and receive State benefits. If these reforms were made, I believe that we could dispose altogether of the Industrial Relations Act.
These steps, which I have often discussed with working people, would be welcomed by large sections of workers who, incidentally, are the first to know and lo point out the scroungers. Instead of this sweeping and, I believe, outdated motion, what is wanted in the country, and what the country wants to hear, is a clarion call to work harder, with incentives, and to have work rewarded. Egalitarianism, as expressed in the motion, must in the end mean controls and tyranny and a sharing of a lower standard of living for all of us.
Listening to Opposition Members today, I could not think of one European country which has a Labour Party with such extreme views on this subject as our own. Hon. Members have referred to class distinctions. Classes will always exist. They exist in Russia. Some people will always rise in life and some will fall. Many workers rise to managerial positions, as I well know from my everyday experience in personnel work, and that is as it should be. But if the motion were passed the country would suffer stagnation. There would be no fluidity and no progress. It is by the efforts of thousands and thousands of ordinary


people, such as those we have seen in the factories during the past few weeks, that the country will survive, and not on the enervating doctrines of Socialism as expressed in the motion.

7.53 p.m.

Mr. Eric S. Heffer: When I attend debates of this kind, I am never sure whether I should become involved in a deep philosophical discussion or attack the Government on their political ineptitude. The debate has touched on the deep philosophical and practical problems with which we are faced which has led to a serious attack on Government policy.
No one will deny that we are in a serious economic situation which has been aggravated by the oil-producing countries deciding that the time has come to use their economic power to increase the price of oil. To a marginal extent—a very limited and small extent—it has undoubtedly been aggravated by the miners' overtime ban.
We have a crisis of the capitalist system. People are bombarded by television and the Press day after day with advertisements telling them that they should buy a new refrigerator, new car or new colour television set, or that they should go for their holidays to Spain, Malta, Greece, Italy or further afield. They are even told that they should use a paper cloth rather than a linen cloth to mop up whatever their children may have spilled.
Then, when the wives say to their husbands, "Why do not we get a new car or colour television set?", or "Why do not we go abroad for a holiday?", the reply is, "Because my wages do not run to it". The wives then say, "Do something about getting better wages". When the workers say, "We will do something about it. We will not only keep up with the cost of living"—that is their first task—"but perhaps ask for a little more so that we might be able to buy these things", they are told that they are criminals and are ruining the country because if they continue in this way we shall have such a crisis that we cannot survive.
What leads to the advertisements? As my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) said, the motive

force in our society is the drive for profit. Hon. Members opposite say that that is fine and that the profit motive ensures that we have a good society and a good life. I do not deny that the capitalist system has brought people many advantages and that the wealth in our capitalist society has grown. Relatively, while the workers' conditions have improved, their position has remained the same. Their wages have increased, but the rewards of those who own the means of production, distribution and wealth have increased on an even larger scale.
The crisis has resulted from the fact that we live in a capitalist society dominated by the profit concept. Profit is put first and people's needs second. Hon. Members opposite say that the idea of Socialism is impossible. It is not, because I have seen it in operation. Anyone who has been to a kibbutz in Israel knows that it can exist—true, in isolated agricultural circumstances, but it is becoming more industrialised. The kibbutzniks are genuine Socialists—the only ones in the world. There is no class conflict in the kibbutz. I want to evolve in this country a society for which all Socialists have fought and of which they have dreamed—a classless society.
But divisions are created in society because we live in a capitalist economy. The hon. Member for Oldbury and Halesowen (Mr. Stokes) spoke as though there were no classes left in society. He said there was no class struggle. The men in the working men's clubs that I go into understand about the class struggle. They understand that the public schools perpetuate class divisions and class prejudice. They understand that those who own the means of production, distribution and exchange are in a different class from those who work in the shipyards, in the mines and on the building sites. I do not want that society to continue.
The hon. Member for Epping (Mr. Tebbit) said that he thought the capitalist system was not very good and would have to be reformed. That is typical of members of the Conservative Party. When they are in trouble they recognise that they must make a few reforms so as to maintain the private enterprise system. In the last analysis, we shall solve the country's problems only on the basis of Socialist planning and Socialist policies.


God help us if we do not, because we shall drift from one crisis to another.

Mrs. Kellett-Bowman: How does Germany manage?

Mr. Heffer: I will come to that.
The hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) referred to works councils as though they would solve the problems in industry. There were works councils in the Weimar Republic but they did not solve the problem of the rise of Hitler and Fascism. They will not solve our problems now. The real answer is the expansion of public ownership. How are we to get the investment that is needed in industry unless the surplus that is created—which hon. Gentlemen opposite call profit—and that will still be created in a Socialist society is ploughed back for the use of the community as a whole? The only answer to the crisis is the programme that the Labour Party is putting forward. We want to extend public ownership not because it is a dogma but because it is the only answer in the last analysis to the issues facing the British people.
If we are to get a viable shipbuilding, ship-repairing and marine engineering industry it will have to be by public ownership. If we want an efficient ports industry it will have to be publicly owned. If we want a drugs industry that does not hand out millions of pounds at the expense of the National Health Service it will have to be publicly owned. If we want to build houses without the people being exploited, all land for urban development will have to be publicly owned. That is an absolute necessity.

Dr. M. S. Miller: North Sea oil.

Mr. Heffer: North Sea oil is a good example. We need to have the resources of this country in the hands of the people as a whole.
The British people have seen through the Conservative Government. They have seen through their complete bankruptcy. The Conservative Government got into power on the basis of lies and they have tried to kid the people from the day they came to power. They have divided the nation from top to bottom by the Industrial Relations Act, the Housing Finance Act, unemployment for the

first 18 months and now by their policy of trying to kid the people once again that all the problems are the fault of the miners and the trade unions. The British people have seen through the Conservative Government and will try to get rid of them at the next General Election.
When a Labour Government get into power we shall take the first steps towards creating the type of Socialist, classless society that is absolutely necessary if the British people are once again to be strong and able to carry through a real productivity policy that is impossible under the capitalist system.

8.7 p.m.

Mr. Patrick Wolrige-Gordon: The hon. Member for Liverpool, Walton (Mr. Heffer) argued for State capitalism or public ownership as opposed to traditional capitalism and private ownership. It was significant that he gave as an example of where he had seen public ownership working the kibbutzim in Israel and not a State that applied this philosophy literally. I accept that he finds it difficult to do so.
I suggest to him that it is perfectly possible to find capitalism which is not dominated by the profit motive but which is concerned with meeting the needs of human beings—which is his rationale for public ownership. The kibbutzim occur in what the hon. Gentleman described as small agrarian communities. Capitalism which is not dominated by the profit motive occurs in small individual firms. That claim is as valid as is the claim made by the hon. Gentleman for State capitalism.
It is easy for any group of people to form themselves together, claim that they are badly treated in comparison with another group and say that they suffer social injustice. I have even heard this done by Members of Parliament. In my part of the country the average gross weekly earnings are 2·1 per cent. less than they are in the South-East. According to a recent report the cost of living in my part of the country is 5 per cent. higher than it is in other parts of the country. It is easy for any group of people—sometimes even for just one individual—to find a reason for claiming that they are suffering socially unjust treatment. Even if the hon. Gentleman's philosophy were applied successfully and


we achieved State capitalism where everyone was paid the same, envy of others would not be done away with, because it is part of human nature. If people are not to be jealous or envious of each other because of the amount of wages they earn, they will speedily find some other reason for being jealous of somebody else or some other section of the community.
We are today debating the divided state of our nation, and certainly the nation is a panorama of division. There are divisions within political parties as well as between them, there are divisions within industry, and divisions even in the homes. But that is not the whole picture. Moreover, such division is a fairly normal part of the main condition. It has been part of this country's history for ever.
The question for us is whether we have reached a state of division so serious that the nation can no longer stand against itself. Have we got to that position? If an election had been announced last week, I would have thought that that might possibly be taken to be the case. But it did not happen.
I want to say how much I support my right hon. Friend the Prime Minister in his efforts to seek some accommodation with the TUC, and eventually with the miners. There has been much talk about a showdown. Some Labour Members in this debate have suggested that the miners have won the allegiance of all working people. But they have certainly not won the allegiance of all the working people in my constituency. There has been much wild talk about a showdown with somebody or other. As far as I am concerned, we are all British and if we want a decent country we must keep working at it together. It is not merely a question of one section in the community with a greed for power putting the community at risk. That is the raison d'être for the forces of moderation and for what goes on in this House, and, as it would appear, for the TUC's initiative.
I hope the Government will be able to meet that initiative in the spirit in which it has been offered. We must make it plain that simply to try to knock hell out of each other all the time does not work. I was dismayed when returning from the sanity of my constituency last week to find Westminster so exclusively concerned with an election—for exactly that reason.

An election has little to do with solving the present difficulty, yet it could not be held for any other reason. In fact we are told that we face the gravest situation since the war. But there is no point in two men fighting on the bridge of a sinking ship to see who is to become captain when what is needed is to cork a hole in the hull.
I think that Parliament could give much more of a lead in this respect than it now does. I know that far more public attention is given to the conflict and the shouting and the kind of speech—it was a brilliant speech—that we heard from the hon. Member for Ebbw Vale (Mr. Michael Foot) than is given to the tolerance and friendship even across parties which one finds in this House. Of the two, the latter is very much the more productive in the general interests of this country and of its people.

8.14 p.m.

Mr. Phillip Whitehead: I am sure that the hon. Member for Aberdeenshire, East (Mr. Wolrige-Gordon) will forgive me if I do not take up his remarks in detail. It seems to me that the purport of what he was saying was that capitalism needed not so much a human face as a heart transplant. That would indeed be a difficult surgical operation, though perhaps some of us would agree with him.
I wish to refer to one or two comments made by Conservative contributors to this debate, particularly the remarks of the hon. Member for Epping (Mr. Tebbit). There is an old Chinese curse, on the lines, "May you live in exciting times". We certainly live in exciting times today. We also live in dangerous times, and there is little dispute about that.
I agree with the hon. Member for Epping that this country is not immune—any more than is any other society in Western Europe—from a breakdown in democracy, which would not necessarily take the form of outright subversion or a putsch, but is a danger of a collapse into cynicism and the idiot results of the poll which we have seen in some other countries of Western Europe. When the tax fiddlers' party can become the second party in the State, as has happened recently in Denmark, it must be said that there is a deep and fundamental malaise


in many of the civilised, sane and sober industrial societies of the West.
It ill became the hon. Member for Epping to go on to build on that sombre warning the view that the Labour Party is in some way involved in the process of subversion. I say that particularly bearing in mind the history of the Conservative Party in times past. There are still those who can remember the attitude of the Conservative Party before the First World War on the question of Ulster. Bonar Law and others can be quoted on that question if we go back far enough. Benjamin Disraeli once told a young Marxist, H. M. Hyndman, that the English are difficult people to move. They are quiet, stubborn people and they can put up with a great deal, and these qualities come out particularly when they face national crises.
This realisation is equally shared by those in my constituency, who have been shaken in the last few years by Rolls-Royce's bankruptcy, and also by the men who work not so far away at Markham Colliery, where it is an act of physical courage to go down the mine, let alone work at the face. The disaster was felt not only by those who were injured and maimed for life but by those who went down the mine to bring out the injured. They have been fundamentally altered by that horrifying incident in their attitude to work and their capacity and preparedness for it. That disaster for three days received great Press sympathy, and the newspapers made a great song and dance about it. But that event passed and now we have the Press calling the miners "subverters" and all the rest of it.
Conservative Members must remember that when working people are faced with a national crisis, they regard it as a crisis that affects them. It is their island, too, and they have no other place to go to. They have no numbered bank accounts in Switzerland. They cannot have their wages, such as they are, paid into havens in the Cayman Islands, as do some hon. Members in this House, who come here afterwards and vote for the counter-inflation policy.
In so far as we are on the brink of a crisis, then the deep divisions in this country will be accentuated if the crisis is exploited, as it has been, for partisan

ends. We know that there is a crisis because of the terms of trade, which have moved against us—probably for good, as my hon. Friend the Member for Edmonton (Mr. Albu) said. We know that there is a crisis because of the massive and, in my lifetime, unprecedented balance of payments deficit and because of the speculation which battens on such a situation. This situation today affects working people, both wage and salary earners, and also the rentier class.
We know that there is preparation for stringent measures in the face of this crisis. People are prepared to accept rationing of domestic electricity, although not the foolish suggestion of cleaning one's teeth in the dark. They would have been prepared to accept petrol rationing, if that had been necessary—and perhaps it was. But they are not prepared to accept work on ration in the so-called three-day week—put on, as many feel, largely because it was dictated by partisan considerations in the immediately pre-election period. If we can, we have to face this crisis as a united nation and not a divided one. Therefore we have to know which way the Government intend to play the crisis.
I have received a letter from an elderly constituent of mine which is typical of many which have been written to me and to other right hon. and hon. Members. She asked me to do my utmost to settle the crisis, apparently unaware of my relative incapacity in that respect. She went on:
Who do these leaders think they are that by their present 'fight to the finish' attitude they make the rest of us suffer and bring the country to its knees?
That is a more common attitude than that expressed by many others who profess to speak for the nation.
The great problem is that many right hon. and hon. Members have come into this debate with their election speeches ready, and they have been thrown by the fact that there is no election. All appeared to be ready. It was all orchestrated in the Press. By the end of last week everyone was unanimous that we were to have an election. Public opinion was prepared. If I may adapt those famous words of Belloc, the stocks were sold, the Press was squared, the middle class was quite prepared, and frightened into the bargain.
Then the Government drew back at the last minute. The onslaught has not come after great damage has been done. But whatever happens, whoever wins the next election and however we seek to deal with the crisis, because of the tone and terms in which the debate was carried on for two or three weeks which might be described as the outpourings of delerium, to go back to that phrase of Charles James Fox, the drums of class warfare from the other side were raised in the country.
The Government's supporters talked of subversives, of traitors, and they described anyone who opposed this or that twist or turn of Government policy as not only acting against the national interest but also as some kind of Communist or subversive. We do not know why they hesitated about an election. We are glad that they did. It may have been the remarks of the right hon. Member for Wolverhampton, South-West (Mr. Powell) about the immorality of an election in these terms. It may have been the Governor of the Bank of England, who was also panicking.
We know that the Government pulled back. We know that they were wise to do so. Whoever won, conciliation would have been impossible after an election, especially if the result had been indecisive because at the end of the day the public would have been indecisive and confused about such an election, and we know that there could have been no process of conciliation in the bitterness after that.
We know that the settling of normal industrial disputes, which have been made abnormal by the terminology in which they have been discussed is far more difficult than before. All this sabre rattling has not come in quiet times. It is not a case of lightning striking out of a clear sky. It has come at a time of sharp crisis, and social division.
I quote one commentary upon these deep divisions on which Government supporters would do well to ponder:
Who will readily forget the brazenly swollen profits of the banks, of the ghastly band of usurers trading in second mortgages
—I am sorry that the Leader of the Liberal Party is not here to listen to this—
… of the property speculators (all working together very often)? If free enterprise is losing its appeal, it must blame some of its own practitioners for behaving so irresponsibly. The activities of a grasping minority, socially insolent, politically illiterate, are becoming extremely offensive to a good part of the nation …
That is not from the Morning Star, from some allegedly subversive trade union leader, or from some Trotskyist tract cycloslyled and distributed at factory gates. It is from the biographer of Edward Heath, Mr. George Hutchinson. He was right to say it in those terms and right to point to the divisions that we have in our society.
They are divisions which mean that when constituents come to see us, as a group of bus drivers from Derby came to see me recently, when they are expected to take home £20 or £23 a week on which to live, it is not unnatural that they ask about phase 3. How can they live on that sort of wage in the present crisis? How can they live on it when the Government try to make them believe that they are somehow responsible for the failure of the export drive, or the collapse of the great enterprise of the Common Market? How are they to live with it if at the end of the day they are addressed as revolutionaries, subversives and traitors to the national interest?
The Secretary of State for Social Services has a great reputation in this House, and rightly so because he has stayed with one Department. He has not played the silly game of ministerial preferment, and his reputation is high. However, when he said today that he intended to throw away his prepared speech and to reply in kind to my hon. Friend the Member for Ebbw Vale, he did his reputation a disservice. To talk of profits being made for the poor, and to talk of the ordinary man being helped by the profits—something like Oldham Estates—is such a contradiction in terms that when he comes to read his speech tomorrow he will see how absurd it sounded to his listeners. The division of what he calls the stagnant national cake, whatever that is, has to be argued about in terms of social justice.
If the Prime Minister wants to settle the disputes before us at the moment, he will do so by conciliation. He will not do it by conflict. I say to the right hon. Gentleman, not as the battle-scarred


figure leading his troops into yet another contradiction of policy, but as the young man who went to Spain before the war and saw the collapse of the Republic, that he should reflect what can happen when deep divisions overwhelm a society with the result that at the end of the day the forces of the extreme right or left take over. We do not want to move in that direction in our society. This Government have one last chance today to take a step away from that abyss.

8.26 p.m.

Mr. Timothy Sainsbury: The hon. Member for Derby, North (Mr. Whitehead), like others, made a serious contribution to a serious subject, although towards the end of it I thought at times that he might have forgotten some of what he said at the beginning.
The hon. Member made a number of statements which, if not supported by argument, will perhaps repay further study. He said that the divisions will be heightened if the crisis is used for partisan ends. I hope that all hon. Members will agree with him in that.
Like others, the hon. Member for Derby, North spoke about the divisions in society which form the basis of the Opposition motion. I hope that it is inadvertent that we debate this subject during the week of prayer for Christian unity. But perhaps there are two interesting points which the House could learn from a search through the centuries for unity within the Christian Church. The first is that if we are to make progress to unity we have to accept that there will always be differences between people and between countries. The second is to value emphasising those fundamental beliefs that we can share rather than to highlight the more minor points about which we disagree.
There will always be divisions in our society, divisions in place, in power, in intelligence and in energy. There will always be contrasts in housing, not least because people have different tastes. The contrast in itself is not bad, but when those at the wrong end of the contrast, the wrong end of the scale, are in real need, I agree that there is a potential source of division and, indeed, outrage in our society.
We must recognise on both sides that this situation exists in places, at least in

housing. Still more must be done in housing ; still more must be done to ensure that vacant residential property is not left needlessly idle. Equally, if we have the interests of the homeless at heart, we should do more to encourage owner-occupiers to bring spare accommodation on to the market instead of continuing, year after year, to discourage the landlord in every possible way, and thus remove from the market a plentiful supply of accomodation that could be useful.
Another important difference in society which will always exist is that between the economically active and the retired. This results in a major difference in economic power. That of itself does not cause offence ; it is only when that economic power is abused that offence is caused. It is not in itself the position of privilege, wealth, intelligence or indeed power that causes offence, but if that power is abused, then divisions are heightened.
It has been suggested that this Government's policies are divisive. I hope that, like the speech of the hon. Member for Ebbw Vale (Mr. Michael Foot), that is just a harmless party political joke or game. We were regaled to a lovely procession from Charles James Fox to Billie Whitelaw by way of Danny La Rue—all very good stuff, even if it did deprive us of a half-hour of serious contribution to a serious subject. If one uses the word "divisive" as it has been used by some Labour Members, one runs the risk of losing its meaning. We all know what has happened to the connotation of "democratic" since some countries which are least democratic adopted the method of masking that fact by including the word in their names.
The Housing Finance Act has been singled out for particular attack. That is remarkable, because, at long last, it gives help with the rent to people rather than buildings. Perhaps that Act is divisive in one sense, because perhaps in their reaction it divides dogmatic Socialists from pragmatic Socialists and, perhaps even more interestingly, Marxist Socialists from Social Democrats.
I said that I thought we could learn something from the search for unity within the Christian Church. We could learn the importance of emphasising the


fundamental things in which we can all believe. For me at least, freedom under the law, parliamentary democracy and a prosperous society should be included in those fundamental beliefs. If there are significant divisions that matter in our society, they are between those of us who share those beliefs and those who reject them. If we look for a united country, we would do better service to our country by reaffirming our support for those fundamental beliefs and avoiding encouraging, directly or indirectly, those who seek not so much to reform our society and our way of life as to destroy it.

8.33 p.m.

Mr. Michael Meacher: The hon. Member for Hove (Mr. Sainsbury) spoke of the inevitability of conflicts and divisions in society. While I would not agree that everything is for the best in this best of all possible worlds, which seemed to be his message, I believe firmly that in a national crisis such as we have at the present, if there is one overriding requirement it is that the Government must be seen to deal honestly with the people. There is no other way, in a democratic society in which sacrifice is needed, as it is at present, whereby it is possible to gain sustained consent. But the nation has not been given the truth by the Government over this crisis.
I start with the origin of the crisis, which certainly does not lie in the miners' pay claim but, rather, in the context of the Government's pay strategy over previous years. In the year prior to stage 1 wages rose slightly faster than profits. According to the former Minister for Employment, in one of those splendid asides for which he is so highly prized, it was precisely this situation, with wages rising slightly faster than profits, that stages 1 and 2 were expressly designed to reverse. They have succeeded beyond what must have been the Government's wildest dreams.
During that period, up to October 1973, workers were forced to take a cut in their real living standards—not much of a cut but a cut nevertheless—while over the same period profits rose rapidly by no less than 16 per cent. and dividends and interest payments roared ahead by up to 28 per cent. That is clearly what stage 3 is all about. In stage 2 workers were forced to take a cut in real wages

while at the same time a massive redistribution from wages to capital was forced upon them. Without a much more comprehensive programme of social fairness than the Government are prepared to countenance, workers will not take a cut in their real living standards for the second year running. That is the real message in this dispute over stage 3.
Stage 3, as constituted—presumably this is intended by the Government—will, at the end of next year, make the workers poorer again than they were at the beginning. The miners are determined to get a decent, real gain and not be forced to take a cut. What the present NCB offer gives them in real terms after taxation is about 2 per cent., which is rather different from many of the figures which the Government have given. We are entitled to know why the Government think that that offer should be accepted when, over the year before, profits were rising at least eight times as fast. The Government have funked telling the nation the hard truth about those figures.
We have had all sorts of appeasing noises about 13 per cent.—or is it 16 per cent?—but the truth is that in real terms in extra purchasing power in their pockets, what the miners are seeking to get is more than the NCB now offers, which is only 2 per cent. We have had the Prime Minister's figures of wheedling generosity repeatedly wheeled out about an average £4·50 a week increase for the miners, but in terms of purchasing power, after tax, the average that the miner will be getting is about an extra 60p a week, or possibly even less if inflation speeds up, as one may expect, from now on.
In contrast to this purported generosity to the miner, the property magnates, after the chastisement of the Chancellor's latest budget, according to The Times, have been laughing all the way to the bank. Nor have the Government been any more honest in explaining the reason why they are determined to resist the miners' claim. The real reason is that they are determined that it shall be the workers who will bear the main brunt of this enormous £2 billion or £3 billion balance of payments deficit and a devaluation of 20 per cent. or even more.
The illusion sown by Ministers—particularly by the Prime Minister—the strategy to conceal the real motivation, is


that if the Government were to give way to the miners' claim, there would be "leapfrogging wage increases". They cite as evidence what happened after the February 1972 miners' strike. But for five or six months after it there was no perceptible increase in the level of pay settlements. As the TUC has rightly said, there were nearly 40 major pay settlements after the miners' strike which were within the pay norm before that strike.
On this evidence, the Government's whole case for resisting the miners' wage claims totally evaporates. What the present crisis comes down to is that the Government are prepared to invoke a partial national lock-out in order to stop the miners getting more than an extra 60p a week. That is what it comes down to in the end. Even if the three-day week were absolutely necessary—and the whole country is totally convinced that it is not—it must surely be the most ridiculous imbalance between cost and benefit in history.
Estimates of the cost of the three-day week have varied from £200 million a week upwards, but whatever the truth, even if it be a lower rather than a higher figure, it must surely be the most zany and irresponsible act in history to impose a cost of £200 million a week on the country and on industry in order to stop the miners from getting an extra £1 million a week. Even the most absurdly and wildly inflationary consequences following from the miners' strike—which did not occur after the successful strike in February 1972—could not remotely cost a fraction of that.
Overcoming inflation in a democratic society demands not transparent hoaxes which divide and attempt—I am glad to say unsuccessfully—to deceive workers, but a policy in which fairness is not only done but is seen to be done. That was the ostensible purpose of the December budget, but merely to bring the peripheral edge of the property market and the tax handouts within stage 3, and that almost as an afterthought, is verging on the cynical when the value of the property tax is 1 or 2 per cent. of the total increase in property values since the last election.
What the tax changes amounted to for the average surtax payer was being asked to hand back about £75 a year out of

the £1,000 a year tax concession that he gained from the Government. If the Chancellor of the Exchequer, as a former poacher, wishes seriously to turn into gamekeeper, he will have to do more than that. He is rather like the thief who, having been caught red-handed, believes that if only he can give up a little of the swag he can carry on acting as before.
What we have had from the Government over the past three years is the rhetoric of one nation but the politics of class division. The Government now, however, show a glimmering of understanding that this is a policy that can no longer work, but they are psychologically incapable of seriously operating a policy of fairness, because they do not believe in it and because it is clearly seen that they do not.
It has been a favourite illusion of Governments in recent years that they can change their rationale in midstream but still carry credibility, but they cannot and they do not. What is needed in this situation of crisis, since social fairness is now almost universally acknowledged to be the required motif of government, is a new Government for whom social fairness is a natural philosophy and not just an expedient façade.

8.43 p.m.

Mr. John Wilkinson: The Opposition's onslaught this afternoon took off on the flights of fancy of the hon. Member for Ebbw Vale (Mr. Michael Foot) and was sustained on the wings of ornithological metaphor much more than by reasoned analysis of the problems confronting the nation. The Opposition's attack has come now full circle to the more precise methodology of the social administrator whom we have come to know so well from reading him in the newspapers and elsewhere, the hon. Member for Oldham, West (Mr. Meacher).
I do not believe that either method will convince ordinary people about the basic issues confronting us. No Opposition Member has seriously suggested how to cure our balance of payments problem and particularly none has been able to suggest convincingly how we are to overcome the imbalance which will be the concomitant of the dramatic change in the terms of trade.
What we have seen has been an exacerbation of the industrial atmosphere


which has perturbed hon. Members. Many Labour Members have been irresponsible in that they have stimulated expectations when in their heart of hearts they must have known that the economic situation was such that those expectations could not possibly be realised. At least the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) has been courageous enough to say that.
In the short time I have for this speech, I will take just three areas of domestic policy to show how the record of this Government has been fair and has acted to bind the nation rather than to divide it.
The first area, the one perhaps dearest to my own heart, is that of regional policy. As hon. Members have said today, the grave imbalance in earnings and in economic opportunities between the different parts of the United Kingdom is one of the factors that must concern the conscience of us all, but in this area, thanks to the Industry Act and thanks to the incentives of expansion and economic development which this Government have introduced, opportunities for growth and for higher earnings in the regions are better than ever before. I know that from my own practical experience in the Yorkshire and Humberside Region, particularly my own part of West Yorkshire, where, before the present trouble, unemployment was for the first time since the Second World War less than the national average.
The environment in which people have to live is something which can manifestly divide people. Into the environment of the centre of our cities—and that is the most deprived environment—the Government have been right to channel assistance, dramatically to improve the situation. There have been general improvement area grants ; in Yorkshire and Humberside there have been 104 of these, and some 28,000 homes have been involved. There have been schemes under the special environmental assistance operation, Operation Eyesore. They constituted £8 million worth of expenditure in Yorkshire and Humberside, and in the Northwest Region they constitute £17 million of public expenditure.
Then we had house improvement grants which have made a major contribution to improving the standard of housing of people in the country generally and in the industrial regions particularly.

In Yorkshire and Humberside alone the number of house improvement grants has gone up in local authority housing from 1,490 in 1968 to 7,200 in 1972, and in the private sector from 5,000 in 1968 to over 10,000. These are very practical methods which assist people.
Lastly, the area of educational opportunity is one which must concern every Member with a conscience. In the Government's education policy we have consistently sought to attack first and foremost the areas of deprivation. The first target was primary schooling, because this has been far too long an area of neglect. I come from an industrial city with a legacy of Victorian buildings and inadequate facilities which had to be tackled. This was the first priority. The second was the polytechnics. In the binary system there are many able students who cannot get to university but who deserve adequate higher education, and by concentrating on these, too, my right hon. Friend the Secretary of State for Education was trying to unite and not to exacerbate division.
Looking to the future in our education programme, the Government's work of expansion was correct in its emphasis, because it is at the outset of education that inequality is greatest, and by concentrating on nursery provision my right hon. Friend was trying genuinely and sincerely to give everybody as equal a start as possible.
The trouble is that the Opposition have been trying far too hard to blind people with shibboleths about City financers, speculators and others, and to shield them from the prospect, which stares them in the face, that if the Opposition get into power we face a programme which will cost the British taxpayer £2,500 million to put into effect. I do not know how that money is to be raised, except, for the greater part, by extra taxation.

Mr. Arthur Lewis: Mr. Arthur Lewis rose—

Mr. Wilkinson: The hon. Member for West Ham, North (Mr. Arthur Lewis) raises a newspaper containing trade figures and by doing so he worsens his own argument.
None of the measures in the programme will do anything to improve the balance of payments situation, not one wit or jot. The City of London knows this, industrialists know this and working


people know this. If one dissects or analyses the programme—

Mr. Arthur Lewis: If you are taking the balance of payments—

Mr. Deputy Speaker (Mr. E. L. Mallalieu): Order. The hon. Gentleman must not accuse me of taking anyone's balance.

Mr. Wilkinson: If one analyses the programme it will be probably found that only £500 million of it can be paid for by cuts in Government expenditure. The first of those cuts, which is conceivable but which I do not think would come into effect, would be the so-called renegotiation of our relationship with the Common Market, and the second would be a unilateral cut in defence. This is what faces the Britain nation. The nation faces a programme from the Opposition of massive increases in taxation. There would be an increase in income tax of no less than a quarter, as the Economist puts it, and that is not an unfair analysis.
By contrast Government policies have been socially uniting. They have concentrated in three years on areas of need and that is right and just.

8.52 p.m.

Mr. Arthur Lewis: Time will not permit me to give a complete list of not only the broken promises of which the Government have been guilty but also of the actions which they have taken in complete opposition to their promises. In 1970 the Government had a surplus on the balance of payments account and promised that they would cut the cost of living and reduce prices "at a stroke". Either the Prime Minister, at that time Leader of the Opposition, knew that world prices had an effect on the situation in this country, or he did not. Either way, it did not say much for his veracity, honesty and policy.
We now find, following the Prime Minister's return to power, that we are confronted with an emergency and a crisis. Anyone walking into the House would think that it had occurred yesterday, or when the miners decided not to work overtime, but since the Government came to power in 1970 they have deliberately, by malice aforethought and action, aggravated and exacerbated the crisis

which is now confronting us. [Interruption.] Of course they did. The hon. Member for Bradford, West (Mr. Wilkinson) spoke about broken promises and about the Government's saying that they would not go into the Common Market without the full-hearted consent of Parliament and the people. That was another broken promise. One may not agree about how much prices have gone up, but everyone agrees that they have gone up through this country's going into the Common Market.

Mr. Robert Redmond: No.

Mr. Arthur Lewis: The Prime Minister admitted only last week that prices had gone up. He said that it was by only 1p in the £, but all these pennies which we hear about tot up.
I have not the time available to make the speech which I intended to make. There has been a continuous attack upon the miners not because they are on strike but because they are refusing to work overtime. There is no law—there cannot be a law—which would make men and women work overtime. This is the last place that should try to insist upon such a law.
What annoys me is when Members who rarely attend the House and some of whom we do not see for months and who send their huge salaries to the Cayman Islands to get them tax free—[Laughter]—I caution hon. Members not to laugh. I will name one Member. The right hon. Member for Streatham (Mr. Sandys) and others have the audacity to attack the miners and say that a generous offer of £2·50 has been made to them. They write articles in the Press—namely, the Sunday Express—which probably take an hour or an hour and a half to write and probably they get for them £100, £200 or £300, certainly 10 times more than the miners get for working in the pits.
These Members come here very occasionally. Then they make a speech. They go on to the radio and for a broadcast lasting about 10 minutes receive more than the miners whom they are attacking. They go on to television and make a great attack upon the selfishness and wickedness of the miners. They allege that the miners are holding the


country to ransom and they say that they—that is, the Members concerned—are all in favour of the prices and incomes policy. Those Members get more for their 10-minute broadcast than the miners get for a week's work.
Those Members come here and say that they are all in favour of the counter-inflation policy. What counter-inflation policy? Phase 1 was supposed to have been a success. It was so successful we had to have phase 2. Phase 2 was supposed to have been a success. It was so successful we had to have phase 3. Phase 3 is supposed to be so successful that we are told we shall have phase 4.
One thing which is certain is that we have never seen such galloping inflation, whether it be in the time of the freeze on wages or whether it be with the so-called control under phase 1, phase 2 or phase 3. We were first told that it was all due to the workers and the trade unions. Then it was suddenly discovered—I think it was the Prime Minister who discovered this—that it was the snow in Siberia and weather conditions that had some effect on prices. When that collapsed it was alleged to be due to some other reason. It was never the fault of the Government or the Government's actions.
Then the Government decided to get out of their difficulties and the problems they had created by attacking the workers and their trade unions. They are surprised that the workers and their trade unions stand up for their rights. Then the Government tried to dodge the whole issue by appointing wages commissions, the Pay Board and the Price Commission, and paying their members fabulous sums.
Incidentally, I read recently that one of these bodies is asking for clerks to decide how to hold down workers' wages and that these clerks are to be paid £4,000 a year. Yet when we take up cases where company directors under phase 1, phase 2 or phase 3 have been evading the Government's policy, not one Minister will take action.
Last week or the week before that the chairman of a big brewery company, when challenged by one of his shareholders, admitted that he had received a £3,000 or £4,000 increase in his salary above phase 3, but said, "I have decided now, as you

have challenged me, to give it to charity". Let us give the miners £3,000 a year extra and ask them to put some of it into charity.
We have a battle going on at present in which certain people who happen to be self-appointed representatives to the European Assembly—euphemistically called the European Parliament—are arguing that their £30 or £40 a day tax free is not sufficient. The Government could solve the miners' crisis tomorrow by giving them the same as the House of Lords get as their daily attendance, or the same as these self-appointed representatives get for going to the European Parliament. I am sure that the miners would then return without any question. The miners would have a ballot, if the Government want a ballot. Give them £27·50 per day tax free and the miners' dispute would be solved tomorrow, because evidently that is not sufficient for some hon. Members on the Government benches, who spend more time in the European Assembly than they do here.

9.0 p.m.

Mrs. Shirley Williams: This debate has not, so to speak, been quite sure whether it was a pre-election debate or not. My hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) was attacked for making a speech which was said to be the preliminary to his election campaign. That charge, however, lies against the Secretary of State for Social Services. Rather unwisely, I thought, the right hon. Gentleman threw his notes away—I am glad that he is now back in his place—and fell back on one of the oldest and hoariest of Conservative arguments—a horse that will not run—the idea that this country is peculiarly heavily taxed.
I challenged the right hon. Gentleman's figures and since he left the Chamber I have confirmed the point which I put to him. The truth—he ought to know it—is that if social insurance payments and direct and indirect taxation are included, the burden on the gross national product of this country in 1971—the last year for which we have figures—was lower than it was for France, West Germany or Sweden. It simply is not true, as the Secretary of State suggested, that this country labours under a disadvantage unique to itself.

Sir K. Joseph: The hon. Lady is misrepresenting what I said. I was talking about personal taxation on earnings and investment income. I stand my ground. Our taxation on those matters, at 75 per cent. maximum and 90 per cent., respectively, is higher than that of Germany, Holland, many countries of Scandinavia, and France. I was not talking about the national burden of taxation.

Mrs. Williams: Then there is a dispute between the right hon. Gentleman and myself. That was not the question which I asked him.
Underlying this debate has been an awareness of the sombre position which the nation faces, a sombre position underlined by last month's trade figures, issued today, which show that last year we had a balance of payments deficit of £2,348 million—a deterioration of no less than £1,700 million since the previous year. Moreover, those figures do not reflect the effect of the three-day week except in very small part.
This morning in the Financial Times there was a preliminary discussion of a forecast by the OECD—I have checked with the OECD, and it does not deny that forecast—indicating that in the first half of the current year the growth prospects for Britain are for a decline of 9·5 per cent., whereas only one month ago the OECD was forecasting an increase in growth of 3·3 per cent. Still quoting the OECD forecast, the Financial Times says that the indication is of a decline, from an increase of 1 per cent. in consumption to a fall of 1 per cent., which suggests a further catastrophic decline in our balance of payments in the first half of next year.
Some hon. Members will recall what was said by the then Governor of the Bank of England in June 1970. Writing at that time in The Times, on 8th June, less than a fortnight before election day, he said:
In spite of the fall of 4s 2d in the £ in spending power at home over this historically short period of time "—
that is, six years—
a grave debasement of the currency unprecedented in peace time causing strife and discontent for everybody—it has been Britain's financial relationship with the rest of the world which has been a pressisng cause for anxiety".
I note that Lord Cromer has become speechless, which is, perhaps, the only

appropriate posture for him to adopt, for the situation today, only three years later, is that the value of the pound at home has deteriorated by 25 per cent., the balance of payments abroad has now reached not just historically the highest figure but by many times the highest figure it has ever reached, and we are still, as a nation, slipping more and more into difficulties by working a three-day week which it is increasingly unclear we ever needed to work. Indeed, one of the things that the Government should do immediately, if they care about the future of this country, is to tell the nation how long it can work and whether or not there will be a General Election, for every moment that uncertainly goes on reduces the strength of the pound still further and makes the prospects for this country yet more bleak.
In the last few weeks the response to the three-day week by both sides of industry has been magnificent. In many parts of the country, as my hon. Friend the Member for Wolverhampton, North-East (Mrs. Renée Short) and others have pointed out, people have been working 10 and 12 hours a day in order to get virtually a full working week into only three days. The hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) pointed out what a magnificent effort had been made in the steel industry. There is much to hope for here in respect of the willingness of the country to respond.

Mr. George Wallace: My hon. Friend the Member for Hitchin (Mrs. Shirley Williams) has referred to the willingness of workers and she is quite right. I wanted to refer to the shoe industry in my constituency. I have a shoe factory working Monday, Tuesday and Wednesday and the workers get only two days benefit for the remainder of the week. Those who work Thursday Friday and Saturday get three days benefit and time and a half after 12 o'clock on Saturday. There is no social justice in that and there is no incentive to carry on working either.

Mrs. Williams: I very much agree with my hon. Friend. I was coming to the point that the short-time working has made the position very much worse in a situation in which questions asked by my right hon. Friend the Leader of


the Opposition and my right hon. Friend the Member for Bristol, South-East (Mr. Benn) remain unanswered. They are crucial questions about the allocation of fuel and the programmes of the refineries. They have not been answered, because the Government's answer to them is likely to be unsatisfactory.
However, while this situation continues we are losing opportunities for exports. It is tragic that the volume of imports is and has been rising faster than exports, even in recent months. Confidence in investment has been badly shaken with a decline of 13 per cent. in the last year, compared with the last year of the Labour Government, and inflationary costs are becoming more difficult to absorb.
When stage 3 started the Chairman of the Price Commission, Sir Arthur Cockfield, speaking at the Business Programmes Conference, said:
In these circumstances (of declining growth) it is perfectly obvious that the opportunities which existed for cost absorbtion in stages 1 and 2 will no longer exist, or certainly not to the same degree, in stage 3 This, perhaps, goes a long way to explain many of the relaxations in the stage 3 code.
He was obviously talking about relaxations in the prices code because there have been no similar relaxations in the pay code.
However, since Sir Arthur spoke the inflationary pressures have strengthened. It is estimated that oil prices alone will increase the cost of living index by between 1½ per cent. and 2 per cent. for the coming year. Commodity prices, which the Government so unwisely believed would fall and save them from their economic difficulties are still exceedingly high and the Economist price index shows a 50 per cent. rise between January and December 1973. In the last three months of November 1973 the wholesale price index rose at an annual rate of 18 per cent. and it has still to work its way through to prices. With these inflationary pressures still growing the retail food index last year increased by 19 per cent., three times faster than in the same period of the Labour Government or as fast as in the whole of the last three years of the Labour Government.
There are others who will learn to use the political weapons that the oil producers have used. I think of coffee and

copper producers and others. Already there are signs of the producers getting together.
I must differ slightly with my hon. Friend the Member for York (Mr. Alexander W. Lyon), who made a first-rate speech. It is, alas, not the poorest of the developing countries that are benefiting from the effects of the use of the political oil weapon. Many of us would feel much happier with the situation if that were true, but countries such as India and others in South-East Asia will suffer far more than we shall.
The massive inflationary pressures, which the Price Commission admits through its chairman can no longer be contained, will trigger off the stage 3 threshold agreements as early as March or April this year. That will mean that the Government will face yet further inflation, which is their own responsibility for the optimism they have shown up to now.
The Governor of the Bank of England, Mr. Gordon Richardson, referred in his speech last week to some years of relative austerity. The situation is grim. The House must face what happens when the standard of living not only will not rise but may well decline. It must ask, "Whose austerity? Who will suffer the relative austerity that Mr. Richardson talked about?".
There is more at stake than just, "You have never had it so bad" or, "You have never had it so good", as the case may be. What is at stake is the safety of our democracy. We do not know how democracies live in a situation in which the expectation of material progress is disappointed, but Opposition Members profoundly believe that it is much more dangerous to refuse the small expectations of the poor than the much greater expectations of the better off.
We have very little confidence in the Government's ability to come up with a right answer. I shall quote only one sentence from that unhappy manifesto, "A Better Tomorrow", in which the Conservatives said:
In implementing our policies, we will give overriding priority to bringing the present inflation under control.
They were referring to an inflation less than half that which the Government face today.
Armoured with that conviction, the Government embarked in their first halcyon, Selsdon period—what one might now describe as their Impressionist period—upon a series of policies to give incentives to business men, upon tax relief for the better-off, and upon the Industrial Relations Act, whose effect on our industrial relations was so clearly outlined by my hon. Friend the Member for Lanarkshire, North (Mr. John Smith). They gave back tax allowances to those who were sending their children to fee-paying schools. They allowed rents to rise, under the Housing Finance Act, at the same time as they reduced the council housing programme. At the end of the day, as my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) pointed out only a month ago, they had achieved rather less growth in their first three years in office than we achieved in our last three years.
The Government then tried to finance their expenditure out of inflation in two ways which have been forcibly pointed out by the right hon. Member for Wolverhampton, South-West (Mr. Powell). They tried to finance their Budget deficits by printing money, and tried to finance some of their imports by floating the pound.
The terms of trade are now worse than at any time since the war, but the Government should not seek to cover themselves with that fact. More than half of the responsibility for the decline in the terms of trade against us is to be laid at the door of the pound, which has been floated without the policies that would have made its floating succeed. In embarking upon inflation the Government have brought about a situation in which they find themselves caught in an inevitable vicious circle which leads towards the destruction of economic confidence. I shall quote only two observations. Yesterday, in the Observer, the economic correspondent wrote:
The Government is faced with a whirlpool situation where our foreign currency yield from exports is dropping while the cost of imports is rising, even though their volume may not increase.
On 10th January, Anthony Harris of the Financial Times wrote:
A system of administered prices is not compatible with a permissively floating exchange rate, or rather with a permissively deteriorating balance of payments.

The Government sought to blame increases in wages for that situation, but in the past year, to November, weekly wage rates rose by 10·9 per cent. and the cost of living by 10·3 per cent., making a real increase of 0·6 per cent. Earnings rose by only 11·1 per cent. against the cost of living increase of 10·3 per cent. over the same period. The Government, by financing Budget deficits and public expenditure out of inflation, have placed the maximum burden on those less able to afford it. They would have achieved exactly the same end had they tried to finance the whole thing by further increases in indirect taxation.
Not only does inflation fall peculiarly heavily on those who have fixed incomes or those who have incomes which they cannot easily bargain upwards ; on the scale which we are now suffering, it undermines the confidence of industry to invest in its own future.

Mr. Wilkinson: What concerns us all—and perhaps the hon. Lady will answer this question—is how the Labour Party's programme campaign, as announced in Campaign Document 1974, will be financed when that document contains virtually an open-ended commitment to an extension of public enterprise, which is bound to be hideously expensive, at a time when the terms of trade are against us and we face a mammoth balance of payments problem.

Mrs. Williams: I shall send the hon. Gentleman a copy of the document. I return to my remarks about Government policy because the Government must take responsibility for the inflation that they have caused. I was saying, when I was politely interrupted, that one of the great features about inflation on the present scale—and Conservative Members should not assume that Labour Members never hear from both sides of industry because we do—is that it has created the market conditions in which the quick buck—the property or commodity speculation—is a very much better bet than investment in plant and machinery of a kind which is crucial to our future.
I give three examples. The first comes from those who are responsible personally for industrial growth. It comes from such people as the Chairman of Tube Investments, who pointed out, only three


months ago, the devastating effect that massive returns to the finance and property market was having on the ability of industry to attract investment for the purpose of industrial growth. It comes from the Director-General of the CBI, who, only yesterday, said that the country now needs policies of much greater redistribution of both wealth and income. It comes from a rather unexpected source—the magazine entitled Building Design, in which we are told that the ICC report, which is available from a City address, indicates that in the past three years, to April 1973, wages in the building industry increased by 21 per cent. on average and that the profit per man increased by 146 per cent. It comes from such facts as that at the very time the Government were engaged upon stage 2 of their incomes policy, which tied everybody down to 4 per cent. plus £1, it was possible for the Economist to carry the advertisement which I have in my hand. The advertisement offered the chief dealer in an international consortium bank in London an initial salary of £12,500 to £17,500, coupled—I ask the House to note this—with a house mortgage of up to £30,000 at 2½ per cent., a contributory pension, free life assurance and free BUPA. One thing which right hon. and hon. Members opposite have never taken on board is the extent to which this kind of fringe benefit makes a mockery of the incomes policy which they advocate.
It is true that inflation of this kind, fuelled, as my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) said, by the endless advertising of non-essential goods, is also fuelled by what I still regard as one of the most irresponsible acts of the banks—the floating of major credit schemes in the middle of one of the most serious periods of inflation that this country has ever suffered. Those credit schemes were not directed at those most able to meet the commitments into which they were invited to enter.
Therefore, the Government cannot claim that the responsibility for rising prices and inflation should be laid wholly at the door of world prices. We on this side of the House have said that world prices bear some responsibility, but it is less than half the responsibility for the situation which we face. The Government's answer to this situation—the most dire financial and economic situation we

have had since the end of the Second World War—has been the 17th December emergency budget. What did that budget do? In a situation in which the Government sought consent for what they regarded as a crucial incomes and prices policy, it once again placed the heaviest burdens on those least able to bear them.
Whose children go to the slum schools which will not now be replaced? Who goes, when he or she is ill, to the National Health Service wards which need to be modernised? Who need the houses which they cannot get because the Government have presided over a more than 25 per cent. cutback in council house programmes? I have heard the Secretary of State for Education and Science make proud statements to the House about her intention to do away with all old primary schools. I have heard the Secretary of State for Social Services make proud statements, which, to be fair, he has endeavoured to carry out, about the need to improve standards in our mental and mental subnormality hospitals. But where are the statements now which indicate how they will absorb the cuts which they are asked to carry?
What do we now do? There are two possibilities, short of a snap election—and the prospects of a snap election are fading, because it could have been held only on the false question, "Who governs the country?" The true question is, "How is the country governed?" It is no longer possible for the Government to put the question "Who governs the country?" because the effort to brand all those in the trade union movement as extremists, militants and irresponsible has been totally destroyed by Mr. Len Murray and his colleagues over the past few weeks. It is the TUC which has been seeking to find a constructive answer to our problems.
The Government are turning to stage 4, which, we are warned, will be worse than anything that has gone before. I warn the Government that stage 4 will not begin to work unless they recognise that all incomes policies—be they so-called voluntary or so-called statutory—are in fact voluntary incomes policies, and must be so in a free society.
That means that in order to make any incomes and prices policy work the Government must carry not just consent


but assent, not just acquiescence but cooperation. If the Government intend to stay in office they must seek with the TUC and the CBI not just discussions about incomes policy in its narrow sense but discussions about all those policies in the social, housing and financial fields that are complementary to and part of any attempt to make an incomes policy work. They must seek a new basis of consent, a new social agreement.
If the Government are even to do that the second part of what is required will have to be looked at by them in a way which I do not believe them to be capable of, and that is the nature of the next Budget. It will have to be a Budget so far-reaching and so radical in its attempt to introduce fairness and social justice and its recognition of the inability of those of our population who are below average standards to bear any more, that I do not believe for one moment that the Chancellor of the Exchequer is capable of introducing it. He must not look simply for cuts in expenditure. It may well be that family allowance increases, food subsidies and a smaller charge for school meals for people who are scraping around to make savings would be a better approach to the reduction he has to make than an across-the-board orthodox attempt to lay all the rest of the burdens upon public expenditure.
I urge right hon. and hon. Gentlemen opposite to consider the words of one of the most famous of all Conservative statesmen, who said, a long time ago:
A nation is not governed which has perpetually to be conquered.
In the same speech he went on to say:
I am not determining a point of law, I am restoring tranquility.
Those words were addressed to one of the most obdurate kings this country has ever had. I am referring to the speech made by Burke about conciliation with the American colonies. He was addressing his remarks to George III. Tonight we address our remarks to another profoundly obdurate statesman. We address our remarks to a person who might be described as the George III of our present political situation. We ask the Prime Minister to seek conciliation and not conflict.
It may well be not just the Government that have their last chance in the next week or so. It may be that this country's prospects of coming through the next two exceedingly difficult years to take advantage of the better years beyond will depend upon what is done in the next few weeks, or even the next few days. We ask the Government to make the psychological leap—of which they have so far been incapable—of understanding that there is much bitterness in our society because of the ways in which policies operate between those who are well off and those who are not, and between those who are in property and finance and those who make their living by what they earn at work. We ask the Government to take this last chance if they can and, if they cannot, to leave it to somebody better equipped to do so.

9.30 p.m.

The Secretary of State for the Home Department (Mr, Robert Carr): The title of this debate is "The Divided Nation". No one doubts the personal credibility of the hon. Lady the Member for Hitchin (Mrs. Shirley Williams) to address this House or any audience in this country on on this subject. She is a genuine social democrat, as indeed are many members of the Labour Party, both inside and outside this House, and as are very large numbers of Labour voters. But the country is entitled to doubt whether this is the dominant voice and the dominant power nowadays within the Labour Party.
Those of us who heard the way in which the debate was opened had that doubt reinforced—[HON. MEMBERS: "Nonsense."] Those Labour Members who choose to shout that at me should witness the speech made by the right hon. Member for East Ham, North (Mr. Prentice) only a few weeks ago:
A party which allows the strident voice of extremism and Left-wing dogmatism to sound so loud and so powerful in its counsels is not the one entitled to lecture this country or the Government of the day on the subject of national unity.
We must face the fact that the whole theme of national unity raises fundamental and difficult questions in a democratic society because "the whole concept of a free, democratic society makes the appearance, as opposed to the reality, of national unity almost impossible, for two


fundamental reasons. First, a free democracy must allow minorities to state their case and their disagreements, and to state them as loudly as they please, provided that they do not indulge in violence or subversion, for this alone creates the appearance always of controversy and disunity in a democratic society. Secondly, and even more fundamentally, it is the the very essence of a democracy that a country should be given a choice—[HON. MEMBERS: "Of Government."]—of alternative policies to vote upon.
It is noteworthy that many items in the Government's policy, which the Opposition now choose to describe as being divisive, were put to this country and its electorate fairly and squarely at the last election and were approved by a majority of the electorate. That applies to the Industrial Relations Act, and to the changes in taxation which have been criticised. It also applies to the housing finance scheme and the method of giving subsidies to people instead of to bricks and mortar. I repeat that most of the matters which the Opposition now charge us with as being divisive were fairly and squarely put to the electorate and were passed by a majority.

Mr. Harold Wilson: And stage 3?

Mr. Carr: The right hon. Gentleman the Leader of the Opposition asks whether it included stage 3. No, it did not, and I freely admit to him that a statutory incomes policy was not put to the electorate then—any more than the right hon. Gentleman put it to the electorate in either 1964 or 1966. I regret the necessity for a statutory policy, as I am sure he regretted its necessity. We both tried to get a degree of control over pay increases by voluntary means. Unfortunately, we both failed and both of us regrettably had to resort to what my right hon. Friend the Secretary of State for Social Services said a little earlier was "second best", namely a statutory policy.
This is something that both parties have to admit. It is nothing peculiar to the Conservative Party—[Interruption.] I am very much against a statutory policy except as a matter of necessity and nobody tried harder than the Conservative Government to do without it, and nobody will be better pleased than this Government

when we can do without it. Nevertheless, just because of the controversial ingredients of democracy, it is of prime importance that we should all try to maximise the degree of consensus and enlarge the size of the majority which supports it. All of us should seek not to maximise or exaggerate the dissent, particularly of the more extreme minorities, at whichever part of the political spectrum they may be.

Mr. Stanley Orme: Tell us about the breakdown of the talks tonight.

Mr. Carr: I have no knowledge of any breakdown. How can the House expect me to have? There will be plenty of opportunity for the House to hear about and no doubt debate whatever has been discussed and decided upon in the talks tonight, but I am not watching the tape at the moment.

Mr. Michael Foot: Many of us have held that the House of Commons is the place where we should debate these matters, and although we perfectly understand that the right hon. Gentleman may not have had the latest report about what has happened in the discussions, we hope that he will give us his view, because the House is entitled to hear it, of the propositions that have been put to the nation by Mr. Len Murray on behalf of the TUC and which have been discussed in the House of Commons before. We want to know the Government's views on these matters. These are the matters that we are here to discuss. They are matters to be discussed in the House of Commons, not somewhere else.

Mr. Carr: Yes, I agree with the hon. Gentleman, these are matters to be discussed in the House of Commons, but today, although he did not seem to realise it when he opened the debate, we happen to be discussing the motion tabled by the Opposition.
I was saying that it was of immense importance that in a democracy we should do all we could to maximise the degree of consensus. But just as it takes two sides to have a confrontation, so it takes two sides to have a reconciliation. If the House of Commons is to play the part that the hon. Member says he wants it to play, the Opposition as well as the Government have a responsibility to


promote the tranquillity of which the hon. Lady the Member for Hitchin was speaking.
There is no future for democracy if the pursuit of a united nation is always held to require that the Government should give way to minorities who shout with the loudest voice, or who possess the greatest power in a particular situation. If we are concerned with national unity, we must seek constantly to identify and to seek and support the needs, the views, the interests and the feelings of the majority of the people, as long as at the same time we do not neglect or unnessarily override the views and the needs of the minorities. But we shall maximise consensus only when we genuinely seek, all of us, to support and identify and articulate the views, the wishes and the needs of the majority.
That is why in Britain we need to speak out and to strengthen and support men and women of reason and moderation who, I am sure, make up the majority of the people of this country. I suggest to the House that we should apply that test to the most controversial issues of the moment and see whether the nation is as divided as the Opposition would have us believe.
I believe, like many of my hon. Friends, that the division in the country is nothing like as great as the Opposition choose to make out. Certainly there is not the monolithic division and confrontation about which they speak and certainly not between organised labour and the rest of the population. There is much more a division, or rather a series of divisions, between particular and differing sections of the community and some of their trade union colleagues from time to time, and also with many other people.
One has only to look at two of the present disputes to realise the truth of that. Look at the dispute on the railways. There it is clearly not a division between the railway unions and the rest of organised labour or the rest of society, but a division and a confrontation between the different unions within the railway industry. The miners' dispute clearly is not a case of the whole trade union movement versus the rest of the country over stage 3—[Interruption.]—because,

for various reasons, 4 million trade unionists and their leaders have already agreed to settle under stage 3 without industrial action. Both in supporting stage 3 and in refusing to go beyond stage 3, we are not participating in any confrontation between the whole of organised labour and the rest of the community.
The House should also consider all the evidence of public opinion provided for us by a whole series of public opinion polls. It is clear from them that a substantial majority of people believe that the miners have been made a reasonable offer in all the circumstances and that the Government should stand firm on the present pay and prices code—and that is beyond gainsaying.
It is also clear, however one may read public opinion polls—we all know what value in terms of ultimate accuracy to put on them—that in recent months support for the Government has grown, not diminished. The evidence therefore is not that the country is more divided than ever it has been: rather is it the opposite.
The problems of divisions and of competing interests between one group in society and another are of course rooted deep in history and are not only longstanding in life but also neither easy nor quick to solve. I believe that it should be the constant aim of each Parliament and each Government to make progress in dissolving some of these frictions and barriers between one section of the community and another. This is one of our prime jobs. It is the job of Government, but the Opposition also have a responsibility in it.
I want to look at some of the main fields of policy which I and the Government believe are most important if we are to make progress towards greater national unity, to say how the present Government have been following these policies and to consider the record of our policies in contrast with those of the Labour Party. First of all, take the case of economic expansion—

Mr. William Molloy: Start with the Cayman patriots.

Mr. Carr: I believe that increasing national wealth is one of the most important resources we need in Britain to remove most of the divisions in our society. We cannot do all we want to


provide better conditions in social services or physical environment simply by redistributing national wealth. Hon. and right hon. Members opposite know that quite well and many of them have the honesty to admit it. We must have a rising real national income.
Similarly, we cannot change the present pattern of differentials and make it more fair, we cannot so easily restructure the pay within individual industries more efficiently and fairly, if at all, in a climate of economic stagnation as we can in a climate of economic expansion. That is why the Government based their strategy on going for economic expansion. We knew that it involved risks: we took those risks and—[An HON. MEMBER: "It has been stopped"]—temporarily, yes, I agree that it has been halted. But if we are talking about unity, let us remember that we adopted that strategy and took those risks with the full support of the trade union movement. It was what the trade union movement requested more strongly than it requested anything else. Let that not be forgotten.
Let us not forget either that until October we were making substantial progress along that line. If one examines the increase in national production, the increase in investment and the increase in export volume relative to import volume one will sense the success which we were on the brink of having. Now it has been temporarily halted. However, it is still important that we as a country should do everything in our power to maintain as good a posture for economic expansion as we possibly can relative to other countries. We shall not be the only country in the present conditions which will have its plans for economic expansion temporarily halted.
It is of the utmost importance that we should maintain our competitive position in this way. I ask the House and the country to compare the record and purpose of the present Government to achieve economic expansion with that of the last Labour Government. I ask the country as well as the House to judge whether the sort of policies that we heard today from the Opposition of widespread further nationalisation, of widespread punitive taxation, are more or less likely to put the country into a position of having such economic activity as we can possibly afford relative to other people.
It is important that we should use our national wealth and, above all, any increases we can obtain in it, to give more generous help to those who need it most. Here, as my right hon. Friend the Secretary of State made clear, we have a record beside which that of the Labour is appalling.
If one examines the size of the pension increase, the commitment to an annual review of pensions, pensions for the over-80s, the constant attendance allowance, the invalidity allowance, the family incomes supplement, the tax credit scheme, rent rebates and allowances for tenants of both council and private properties, one see that there is no Government, Labour or Conservative before us, who have done more in three years to use and apply our national wealth for those who need it most.
A third area—if we want a united nation—is to try to achieve fairer pay differentials. We must do something for the low paid. This, too, was one of the points which the TUC pressed most strongly upon us, and in both stages 2 and 3 of our counter-inflationary policy special reference has been made to the lower paid. No one can deny that, nor can the Labour Party claim that it ever tried to do anything comparable to help the lower paid. In addition to that, at its request we have said that we are ready to talk with the TUC about establishing machinery for dealing with the lower paid if it thinks that that will be helpful.
If we are to make differentials fairer—with which free collective bargaining has so far, unfortunately, signally failed to deal—we must have some machinery for adjusting differentials to take account of both social and economic needs. Here again, in the report that we are about to have on pay relativities we are seeing perhaps the first serious step towards trying to bring some national ranking of claims and some joint machinery within industry and with the Government to bring about fairer pay differentials. This, too, is an enormous improvement and advance upon anything attempted before.
Then if we are to promote greater unity we need to bring more interests and more people into the process of decision taking in respect of major policy matters affecting their lives. If hon. Members consider what has happened at national


level and talk individually to individual trade union leaders and employers, as no doubt many of them have, they will know that no Government before—either Conservative or Labour—have entered so seriously into detailed discussions about the strategy and tactics of economic policy as this Government have with the TUC, and CBI and other interests since the summer of 1972. But it has to be not only at the level of the nation. It also has to be at the level of the individual company and factory. Therefore I ask the House to consider the Code of Industrial Relations Practice which sets new standards for consultation and co-operation.
Shortly we shall produce a Green Paper about greater consultation of and participation by employees in the affairs of their companies. Shortly, too, we shall be setting up new joint organisations to deal with health and safety and with the study of making life and work more satisfying and less frustrating than it is in many industrial processes at the moment.
Let the House consider the bargaining agency sections of the Industrial Relations Act. Let the House see the rights which exist there, waiting for the taking, for people on the shop floor to opt for the union of their choice, and to make sure that they are recognised and that employers have to negotiate with them. I ask the House to look at some of the unions which have taken advantage of that provision.
Then if we are to have a more united nation we need more opportunity and more potential for individuals whether as workers or as consumers. Let the House look at the need in this country for more training and at what this Government have done about it. Since we came to power, the opportunities for training in Government sponsored schemes have already been trebled. They have risen from between 10,000 and 15,000 a year to about 30,000 now. They will rise to 75,000 by 1975 and to 100,000 a year by the year after that.
Let the House also look at the protection provided to individuals again by some of the sections of the Industrial Relations Act. I refer to new rights

and protections of which 15,000 or more people have already taken advantage.

Mr. Reg Prentice: We are in an extraordinary position. We are getting snippets of news to the effect that the talks between the Government and the TUC have broken down, with the most serious consequences to the nation. The right hon. Gentleman, as a senior Minister, is not telling us what has happened. He is not giving us any idea of where the Government intend to go from here. If the right hon. Gentleman has no up-to-date information to give the House, does not that show the bankruptcy of the Government's policy in this critical situation?

Mr. Carr: The right hon. Member for East Ham, North (Mr. Prentice) should know better and should be fairer than that. How can any Minister charged with the task of winding up a debate of this nature know enough about what has happened—when I understand that the talks broke up only within the last hour—to tell the House exactly what has occurred. It would be highly irresponsible to seek to report to the House or to comment about what has happened.

Mr. Prentice: We are told that a Minister is going on television tonight to announce the progress or the lack of progress in the talks. In that situation cannot this House of Commons be told by the right hon. Gentleman?

Mr. Carr: I have no idea who is going on television tonight. I presume that as usual after talks of this kind, and as happened very often when the right hon. Gentleman's party was in power, members of the trade union delegation and probably also members of the Government who participated in the talks may well participate in some questioning. That may be happening for all I know. One thing I can repeat is that these matters will be reported to the House and, no doubt, fully debated by the House.
If we look at other forms of policy required to bring about national unity in this country we can consider regional policy to bring about equality between the different parts of the country. No Government before have devoted as much resources to that as we. If we look at the conditions of our cities, w see that the urban programme has been bigger than


ever before. If we look at the steps taken to bring about equality between men and women—

Mr. John Morris: On a point of order. I am sorry to interrupt the right hon. Gentleman, but in view of the importance of the point raised by my right hon. Friend the Member for East Ham, North (Mr. Prentice) would it not be in order, Mr. Speaker, for the Patronage Secretary to move the suspension of the Standing Order at 10 o'clock so that a full report may be made to the House tonight?

Mr. Speaker: It would not be in order to move the suspension of the Standing Order except as is set out on the Order Paper.

Mr. Carr: There are two other important matters of policy if we are to promote national unity. One is the need to hold the line against inflation. Nothing is more necessary to national unity than to do this. Nothing is more destructive to the stability and unity of society than inflation, if it is allowed to get out of control. Stages 1 and 2 of our policy have for the first time for many years provided better control over the domestic causes of inflation—

Mr. Reginald Freeson: On a point of order, Mr. Speaker. Would you reconsider the ruling you gave a few moments ago to my right hon. and learned Friend the Member for Aberavon (Mr. John Morris)? Is it not a matter that can be raised on the Adjournment of the House—a statement to the House by the Prime Minister about the breakdown of the talks with the TUC?

Mr. Speaker: In my view the proposition put to me, which I thought related to the suspension of the Standing Order, would have been out of order. A matter of that sort must be put on the Order Paper.

Mr. Carr: If we are to promote the unity of this nation we must hold the line against inflation and that is what the Government are committed to.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: Order. I should add that on the Motion for the Adjournment of the House there could be a statement. Otherwise there cannot be a statement.

Mr. Carr: We must hold the line against inflation and that is what this Government are committed to. That is what we shall continue to do because we believe that it is in the interests of the whole of the people of this country.

9.58 p.m.

Mr. Walter Harrison: Mr. Walter Harrison (Wakefield) rose in his place, and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly.

The House proceeded to a Division—

Mr. Molloy: (seated and covered): On a point of order, Mr. Speaker. Could you inform the House whether it would be possible for any of the Ministers who have been attending the talks at No. 10 Downing Street to come to the House to make a statement? In so far as I am sure that you, Mr. Speaker, would not permit any of the TUC leaders to come here to explain what has happened, I am asking whether it would be in order for any of the Ministers or the Leader of the House to make a statement to the House after the business of this Division has been concluded. Would it be in order for any Minister so to do?

Mr. Speaker: I am governed by the rules of the House. Today we have to deal first with this motion. Then we have to deal with the Report stage of the Statutory Corporations (Financial Provisions) Bill. Then we have to deal with the two orders relating to sea fisheries. Then we come to the Adjournment of the House. On the Adjournment of the House anyone can raise anything if he catches my eye.

Mr. Molloy: Further to my point of order, Mr. Speaker. If the intelligence of your ruling is conveyed to the Prime Minister or any of his colleagues, would it therefore be in order for them to make such a statement on the Adjournment?

Mr. Speaker: That would not be a matter for me.

The House having divided: Ayes 272, Noes 290.

Division No. 30].
AYES
[9.59 p.m


Abse, Leo
Faulds, Andrew
Mabon, Dr. J. Dickson


Albu, Austen
Fernyhough, Rt. Hn. E.
McBride, Neil


Allaun, Frank (Salford, E.)
Fisher, Mrs. Doris (B'ham, Ladywood)
McCartney, Hugh


Armstrong, Ernest
Fitch, Alan (Wigan)
McElhone, Frank


Ashley, Jack
Fletcher, Ted (Darlington)
McGuire, Michael


Ashton, Joe
Foot, Michael
Machin, George


Atkinson, Norman
Ford, Ben
Mackenzie, Gregor


Austick, David
Forrester, John
Mackie, John


Bagier, Gordon A. T.
Fraser, John (Norwood)
Mackintosh, John P.


Barnes, Michael
Freeson, Reginald
Maclennan, Robert


Barnett, Guy (Greenwich)
Freud, Clement
McMillan, Tom (Glasgow, C.)


Barnett, Joel (Heywood &amp; Royton)
Galpern, Sir Meyer
McNamara, J. Kevin


Baxter, William
Garrett, W. E.
Mahon, Simon (Bootie)


Beaney, Alan
Gilbert, Dr. John
Mallalieu, J. P. W. (Huddersfield, E.)


Beith, A. J.
Ginsburg, David (Dewsbury)
Marks, Kenneth


Benn, Rt. Hn. Anthony Wedgwood
Golding, John
Marquand, David


Bennett, James (Glasgow, Bridgeton)
Gordon Walker, Rt. Hn. P. C.
Marsden, F.


Bidwell, Sydney
Gourlay, Harry
Marshall, Dr. Edmund


Bishop, E. S.
Grant, George (Morpeth)
Mayhew, Christopher


Blenkinsop, Arthur
Grant, John D. (Islington, E.)
Meacher, Michael


Boardman, H. (Leigh)
Griffiths, Eddie (Brightside)
Mellish, Rt. Hn. Robert


Booth, Albert
Grimond, Rt. Hn. J.
Mikardo, Ian


Boothroyd, Miss Betty
Hamilton, James (Bothwell)
Millan, Bruce


Bottomley, Rt. Hn. Arthur
Hamilton, William (Fife, W.)
Miller, Dr. M. S.


Boyden, James (Bishop Auckland)
Hamling, William
Milne, Edward


Bradley, Tom
Hannan, William (G'gow, Maryhill)
Mitchell, R. C. (S'hamptan, Itchen)


Broughton, Sir Alfred
Hardy, Peter
Molloy, William


Brown, Robert C. (N'c'tle-u-Tyne, W.)
Harper, Joseph
Morgan, Elystan (Cardiganshire)


Brown, Hugh D. (G'gow, Provan)
Harrison, Walter (Wakefield)
Morris, Alfred (Wythenshawe)


Brown, Ronald (Shoreditch &amp; F'bury)
Hart, Rt. Hn. Judith
Morris, Rt. Hn. John (Aberavon)


Buchan, Norman
Hattersley, Roy
Moyle, Roland


Buchanan, Richard (G'gow, Sp'burn)
Hatton, F.
Mulley, Rt. Hn. Frederick


Butler, Mrs. Joyce (Wood Green)
Healey, Rt. Hn. Denis
Murray, Ronald King


Callaghan, Rt. Hn. James
Heffer, Eric S.
Oakes, Gordon


Campbell, I. (Dunbartonshire, W.)
Hilton, W. S.
Ogden, Eric


Cant, R. B.
Hooson, Emlyn
O'Halloran, Michael


Carmichael, Neil
Horam, John
O'Malley, Brian


Carter, Ray (Birmingh'm, Northfield)
Houghton, Rt. Hn. Douglas
Oram, Bert


Carter-Jones, Lewis (Eccles)
Howell, Denis (Small Heath)
Orbach, Maurice


Castle, Rt. Hn. Barbara
Huckfield, Leslie
Orme, Stanley


Clark, David (Colne Valley)
Hughes, Rt. Hn. Cledwyn (Anglesey)
Owen, Dr. David (Plymouth, Sutton)


Cocks, Michael (Bristol, S.)
Hughes, Mark (Durham)
Padley, Walter


Concannon, J. D.
Hughes, Robert (Aberdeen, N.)
Palmer, Arthur


Conlan, Bernard
Hughes, Roy (Newport)
Pannell, Rt. Hn. Charles


Corbet, Mrs. Freda
Hunter, Adam
Parker, John (Dagenham)


Cox, Thomas (Wandsworth, C.)
Irvine, Rt. Hn. Sir Arthur (Edge Hill)
Pavitt, Laurie


Crawshaw, Richard
Janner, Greville
Perry, Ernest G.


Cronin, John
Jay, Rt. Hn. Douglas
Prentice, Rt. Hn. Reg.


Crosland, Rt. Hn. Anthony
Jeger, Mrs. Lena
Price, William (Rugby)


Crossman, Rt. Hn. Richard
Jenkins, Hugh (Putney)
Probert, Arthur


Cunningham, G. (Islington, S. W.)
Jenkins, Rt. Hn. Roy (Stechford)
Radice, Giles


Cunningham, Dr. J. A. (Whitehaven)
John, Brynmor
Reed, D. (Sedgefield)


Dalyell, Tam
Johnson, Carol (Lewisham, S.)
Rees, Merlyn (Leeds, S.)


Darling, Rt. Hn. George
Johnson, James (K'ston-on-Hull, W.)
Rhodes, Geoffrey


Davidson, Arthur
Johnson, Walter (Derby, [...])
Richard, Ivor


Davies, Denzil (Llanelly)
Johnston, Russell ([...])
Roberts, Albert (Normanton)


Davies, G. Elfed (Rhondda, E.)
Jones, Dan (Burnley)
Roberts, Rt. Hn. Goronwy (Caernarvon)


Davies, lfor (Gower)
Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Robertson, John (Paisley)


Davis, Clinton (Hackney, C.)
Jones, Gwynoro (Carmarthen)
Roderick, Caerwyn E. (Brc'n&amp;R'dnor)


Davis, Terry (Bromsgrove)
Jones, T. Alec (Rhondda, W.)
Rodgers, William (Stockton-on-Tees)


Deakins, Eric
Judd, Frank
Rose, Paul B.


de Freitas, Rt. Hn. Sir Geoffrey
Kaufman, Gerald
Ross, Rt. Hn. William (Kilmarnock)


Delargy, Hugh
Kelley, Richard
Rowlands, Ted


Dell, Rt. Hn. Edmund
Kerr, Russell
Sandelson, Neville


Dempsey, James
Kinnock, Neil
Sheldon, Robert (Ashton-under-Lyne)


Doig, Peter
Lambie, David
Short, Rt. Hn. Edward (N' c'tle-u-Tyne)


Douglas, Dick (Stirlingshire, E.)
Lamborn, Harry
Short, Mrs. Renée (W'hampton, N. E.)


Douglas-Mann, Bruce
Lamond, James
Silkin, Rt. Hn. John (Deptford)


Driberg, Tom
Latham, Arthur
Silkin, Hn. S. C. (Dulwich)


Duffy, A. E. P.
Leadbitter, Ted
Sillars, James


Dunn, James A.
Lee, Rt. Hn. Frederick
Silverman, Julius


Dunnett, Jack
Leonard, Dick
Skinner, Dennis


Eadie, Alex
Lestor, Miss Joan
Smith, John (Lanarkshire, N.)


Edelman, Maurice
Lever, Rt. Hn. Harold
Spearing, Nigel


Edwards, Robert (Bilston)
Lewis, Arthur (W. Ham, N.)
Spriggs, Leslie


Edwards, William (Merioneth)
Lipton, Marcus
Stallard, A. W.


Ellis, Tom
Lomas, Kenneth
Steel, David


English, Michael
Loughlin, Charles
Stewart, Rt. Hn. Michael (Fulham)


Evans, Fred
Lyon, Alexander W. (York)
Stoddart, David (Swindon)


Ewing, Harry
Lyons, Edward (Bradford, E.)
Stonehouse, Rt. Hn. John







Stott, Roger
Varley, Eric G.
Willey, Rt. Hn. Frederick


Strang, Gavin
Wainwright, Edwin
Williams, Alan (Swansea, W.)


Strauss, Rt. Hn. G. R.
Walden, Brian (B'm'ham, All Saints)
Williams, Mrs. Shirley (Hitchin)


Summerskill, Hn. Dr. Shirley
Walker, Harold (Doncaster)
Williams, W. T. (Warrington)


Swain, Thomas
Wallace, George
Wilson, Alexander (Hamilton)


Thomas, Rt. Hn. George (Cardiff, W.)
Watkins, David
Wilson, Rt. Hn. Harold (Huyton)


Thomas, Jeffrey (Abertillery)
Weitzman, David
Wilson, William (Coventry, S.)


Thorpe, Rt. Hn. Jeremy
Wellbeloved, James
Woof, Robert


Tinn, James
Wells, William (Walsall, N.)



Tope, Graham
White, James (Glasgow, Pollok)
TELLERS FOR THE AYES:


Torney, Tom
Whitehead, Phillip
Mr. Ronald Coleman and


Tuck, Raphael
Whitlock, William
Mr. J. D. Dormand.




NOES


Adley, Robert
Elliot, Capt. Walter (Carshalton)
Johnson Smith, G. (E. Grinstead)


Alison, Michael (Barkston Ash)
Elliott, R. W. (N'c'tle-upon-Tyne, N.)
Jones, Arthur (Northants, S.)


Allason, James (Hemel Hempstead)
Emery, Peter
Jopling, Michael


Amery, Rt. Hn. Julian
Eyre, Reginald
Joseph, Rt. Hn. Sir Keith


Archer, Jeffrey (Louth)
Fell, Anthony
Kaberry, Sir Donald


Astor, John
Fenner, Mrs. Peggy
Kellett-Bowman, Mrs. Elaine


Atkins, Humphrey
Fidler, Michael
Kershaw, Anthony


Awdry, Daniel
Finsberg, Geoffrey (Hampstead)
Kimball, Marcus


Baker, Kenneth (St. Marylebone)
Fisher, Sir Nigel (Surbiton)
King, Evelyn (Dorset, S.)


Baker, W. H. K. (Banff)
Fletcher, Alexander (Edinburgh, N.)
King, Tom (Bridgwater)


Barber, Rt. Hn. Anthony
Fletcher-Cooke, Charles
Kinsey, J. R.


Batsford, Brian
Fookes, Miss Janet
Kirk, Peter


Beamish, Col. Sir Tufton
Fortescue, Tim
Kitson, Timothy


Bell, Ronald
Foster, Sir John
Knight, Mrs. Jill


Bennett, Dr. Reginald (Gosport)
Fowler, Norman
Knox, David


Benyon, W.
Fox, Marcus
Lamont, Norman


Berry, Hn. Anthony
Fraser, John (Norwood)
Lane, David


Biffen, John
Fry, Peter
Langford-Holt, Sir John


Biggs-Davison, John
Galbraith, Hn. T. G. D.
Le Marchant, Spencer


Blaker, Peter
Gardner, Edward
Lewis, Kenneth (Rutland)


Boardman, Tom (Leicester, S. W.)
Gilmour, Ian (Norfolk, C.)
Lloyd, Rt. Hn. Geoffrey (Sut'nC'field)


Body, Richard
Gilmour, Sir John (Fife, E.)
Lloyd, Ian (P'tsm'th, Langstone)


Boscawen, Hn. Robert
Glyn, Dr. Alan
Longden, Sir Gilbert


Bossom, Sir Clive
Goodhart, Philip
Loveridge, John


Bowden, Andrew
Goodhew, Victor
Luce, R. N.


Braine, Sir Bernard
Gorst, John
McAdden, Sir Stephen


Bray, Ronald
Gower, Sir Raymond
MacArthur, Ian


Brewis, John
Grant, Anthony (Harrow, C.)
McCrindle, R. A.


Brinton, Sir Tatton
Gray, Hamish
McLaren, Martin


Brocklebank-Fowler, Christopher
Green, Alan
Macmillan, Rt. Hn. Maurice (Farnham)


Brown, Sir Edward (Bath)
Griffiths, Eldon (Bury St. Edmunds)
McNair-Wilson, Michael


Bruce-Gardyne, J.
Grylls, Michael
McNair-Wilson, Patrick (New Forest)


Bryan, Sir Paul
Gummer, J. Selwyn
Madel, David


Buchanan-Smith, Alick (Angus, N&amp;M)
Gurden, Harold



Buck, Antony
Hall, Miss Joan (Keighley)
Marples, Rt. Hn. Ernest


Bullus, Sir Eric
Hall, Sir John (Wycombe)
Marten, Neil


Burden, F. A.
Hall-Davis, A. G. F.
Mather, Carol


Butler, Adam (Bosworth)
Hamilton, Michael (Salisbury)
Maude, Angus


Campbell, Rt. Hn. G.(Moray &amp; Nairn)
Hannam, John (Exeter)
Maudling, Rt. Hn. Reginald


Carlisle, Mark
Harrison, Brian (Maldon)
Mawby, Ray


Carr, Rt. Hn. Robert
Harrison, Col. Sir Harwood (Eye)
Maxwell-Hyslop, R. J.


Cary, Sir Robert
Harvie Anderson, Miss
Meyer, Sir Anthony


Channon, Paul
Haselhurst, Alan
Mills, Peter (Torrington)


Chapman, Sydney
Hastings, Stephen
Miscampbell, Norman


Chichester-Clark, R.
Havers, Sir Michael
Mitchell, Lt.-Col. C.(Aberdeenshire, W)


Churchill, W. S.
Hay, John
Mitchell, David (Basingstoke)


Clark, William (Surrey, E.)
Hayhoe, Barney
Moate, Roger


Cockeram, Eric
Heath, Rt. Hn. Edward
Money, Ernle


Cooke, Robert
Heseltine, Michael
Monks, Mrs. Connie


Coombs, Derek
Hicks, Robert
Monro, Hector


Cooper, A. E.
Higgins, Terence L.
Montgomery, Fergus


Cordle, John
Hiley, Joseph
More, Jasper


Corfield. Rt. Hn. Sir Frederick
Hill, John E. B. (Norfolk, S.)
Morgan, Geraint (Denbigh)


Cormack, Patrick
Hill, S. James A. (Southampton, Test)
Morgan-Giles, Rear-Adm.


Costain, A. P.
Holland, Philip
Morrison, Charles


Crouch, David
Holt, Miss Mary
Mudd, David


Crowder, F. P.
Hordern, Peter
Neave, Airey


Davies, Rt. Hn. John (Knutsford)
Hornby, Richard
Nicholls, Sir Harmar


d'Avigdor-Goldsmid, Sir Henry
Hornsby-Smith, Rt. Hn. Dame Patricia
Noble, Rt. Hn. Michael


d'Avigdor-Goldsmid, Maj.-Gen. Jack
Howe, Rt. Hn. Sir Geoffrey (Reigate)
Normanton, Tom


Dean, Paul
Howell, David (Guildford)
Nott, John


Deedes, Rt. Hn. W. F.
Howell, Ralph (Norfolk, N.)
Onslow, Cranley


Dixon, Piers
Hunt, John
Oppenheim, Mrs. Sally


Dodds-Parker, Sir Douglas
Hutchison, Michael Clark
Owen, Idris (Stockport, N.)


Douglas-Home, Rt. Hn. Sir Alec
Iremonger, T. L.
Page, Rt. Hn. Graham (Crosby)


Drayson, Burnaby
Irvine, Bryant Godman (Rye)
Parkinson, Cecil


du Cann, Rt. Hn. Edward
James, David
Percival, Ian


Dykes, Hugh
Jenkin, Rt. Hn. Patrick (Woodford)
Peyton, Rt. Hn. John


Eden, Rt. Hn. Sir John
Jennings, J. C. (Burton)
Pike, Miss Mervyn


Edwards, Nicholas (Pembroke)
Jessel, Toby
Pink, R. Bonner







Pounder, Rafton
Shersby, Michael
Turton, Rt. Hn. Sir Robin


Powell, Rt. Hn. J. Enoch
Simeons, Charles
van Straubenzee, W. R.


Price, David (Eastleigh)
Sinclair, Sir George
Vaughan, Dr. Gerard


Prior, Rt. Hn. J. M. L.
Skeet, T. H. H.
Waddington, David


Proudfoot, Wilfred
Smith, Dudley (W'wick &amp; L'mington)
Walder, David (Clitheroe)


Quennell, Miss J. M.
Soref, Harold
Walker, Rt. Hn. Peter (Worcester)


Raison, Timothy
Speed, Keith
Walker-Smith, Rt. Hn. Sir Derek


Rawlinson, Rt. Hn. Sir Peter
Spence, John
Walters, Dennis


Redmond, Robert
Sproat, lain
Ward, Dame Irene


Reed, Laurance (Bolton, E.)
Stainton, Keith
Weatherill, Bernard


Rees, Peter (Dover)
Stanbrook, Ivor
Wells, John (Maidstone)


Rees-Davies, W. R.
Stewart-Smith, Geoffrey (Belper)
White, Roger (Gravesend)


Renton, Rt. Hn. Sir David
Stodart, Rt. Hon. Anthony
Whitelaw, Rt. Hn. William


Rhys Williams, Sir Brandon
Stokes, John
Wiggin, Jerry


Ridley, Hn. Nicholas
Stuttaford, Dr. Tom
Wilkinson, John


Ridsdale, Julian
Sutcliffe, John
Winterton, Nicholas


Rippon, Rt. Hn. Geoffrey
Tapsell, Peter
Wolrige-Gordon, Patrick


Roberts, Wyn (Conway)
Taylor, Sir Charles (Eastbourne)
Wood, Rt. Hn. Richard


Rodgers, Sir John (Sevenoaks)
Taylor, Edward M. (G'gow, Cathcart)
Woodhouse, Hn. Christopher


Rossi, Hugh (Hornsey)
Taylor, Frank (Moss Side)
Woodnutt, Mark


Rost, Peter
Tebbit, Norman
Worsley, Sir Marcus


Royle, Anthony
Temple, John M.
Wylie, Rt. Hn. N. R.


Russell, Sir Ronald
Thatcher, Rt. Hn. Mrs. Margaret
Younger, Hn. George


St. John-Stevas, Norman
Thomas, John Stradling (Monmouth)



Sainsbury, Timothy
Thomas, Rt. Hn. Peter (Hendon, S.)
TELLERS FOR THE NOES:


Scott, Nicholas
Thompson, Sir Richard (Croydon, S.)
Mr. Walter Clegg and


Scott-Hopkins, James
Trafford, Dr. Anthony
Mr. Paul Hawkins.


Shaw, Michael (Sc'b'gh &amp; Whitby)
Trew, Peter



Shelton, William (Clapham)
Tugendhat, Christopher

Question accordingly negatived.

Orders of the Day — BUSINESS OF THE HOUSE

Ordered,

That the Statutory Corporations (Financial Provisions) Bill may be proceeded with at this day's Sitting, though opposed, until any hour.—[Mr. Humphrey Atkins.]

Orders of the Day — THE NATION DIVIDED

10.15 p.m.

Mr. Harold Wilson: On a point of order, Mr. Speaker. Are we now to have a statement on the very important talks which broke down at Downing Street today? The matter was, I understand, raised in the concluding stages of the debate on the motion. [An HON. MEMBER: "Why were you not here?"] I was not here because the Prime Minister did not listen to my hon. Friend the Member for Hitchin (Mrs. Shirley Williams), and there is no reason why I should listen to the right hon. Gentleman the Home Secretary. But during the time I was out of the Chamber I heard from Ministers of the Crown, including the Chancellor of the Exchequer, very important statements on the welfare of the nation which have not been given to the House. May we now have a statement from the Government?

The Lord President of the Council and Leader of the House of Commons (Mr. James Prior): Further to that point of

order. It has never been the usual practice of the House for statements of this nature to be made at this time of night. I shall convey the right hon. Gentleman's wishes to my right hon. Friend the Prime Minister. If the Opposition wanted to be reasonable and fair about this, it would be far better for them to await a statement at the proper time, rather than to have it tonight.

Mr. Wilson: Further to the right hon. Gentleman's statement, that would be an acceptable proposition if the Chancellor had not been quite clear 10 minutes ago what the nation should be told. If he was clear about it, why is not the Prime Minister clear enough about it to tell the House? In view of the line the Leader of the House is taking—and we do not want half an hour of points of order—[Interruption.] No. We want a statement about what has been happening to the country. We have had it on television, but we have not had it in the House. Therefore, I ask the right hon. Gentleman to give not an assurance that he will bring my question to the notice of his right hon. Friend but a positive assurance that after Questions tomorrow there will be a statement by the Prime Minister about what has happened today.

Mr. Prior: Having been in opposition a number of years, I find the very thought that the right hon. Gentleman never went on television unless he had made a statement to the House first a little hard to put up with. Having said that, I will go no


further than to say—[HON. MEMBERS: "Resign."]—

Mr. Speaker: Order. I want to hear what the Lord President has to say about business for tomorrow.

An Hon. Member: Let the right hon. Gentleman speak for the House and not the Tory Party.

Mr. Prior: I will speak for the House, and I will speak for my own Government. [Interruption.] The more Opposition Members shout, the worse it will get. I shall, of course, convey the sentiments of the House to my right hon. Friend. I should be very surprised if he did not want to make a statement tomorrow afternoon in view of what has happened this evening. But I cannot commit him in advance.

Mr. Orme: On a point of order, Mr. Speaker.

Mr. Speaker: Order. Is it the same point of order?

Mr. Orme: On a point of order, Mr. Speaker.

Mr. Speaker: Is the hon. Gentleman raising a different point of order?

Mr. Orme: Mr. Speaker, the Leader of the House is responsible to the House as a whole, and the statement which he has just made is a disgrace. He has a responsibility to the House to treat the House with the respect it deserves.

Mr. Speaker: Order. I ask the House to help the Chair. The point is not really a point of order. It is a convention of the House that Opposition Front Bench spokesmen such as the Leader of the Opposition, or whoever it may be, may ask a question on business under the guise of a point of order. It is not the convention of the House—[Interruption] Order.

Mr. Orme: Mr. Orme rose—

Mr. Speaker: I must be allowed to finish my sentence. It is not a convention of the House that this so-called point of order can be extended and that other hon. Members can join in. That is not the custom of the House, and I ask the hon. Gentleman not to persist.

Mr. Orme: On a point of order, Mr. Speaker. I understand the point which you are making. I follow up the point which I have just made about the Leader of the House with a question—namely, will a statement be made to the House? The right hon. Gentleman did not give a clear answer to my right hon. Friend.

Mr. Speaker: Order. That is precisely the point with which I was trying to deal. I allow the Leader of the Opposition or Opposition spokesmen to raise this so-called point of order, but it is the convention of the House that once it has been dealt with it shall not be allowed to develop into a debate. Therefore, we will go to the next business.

Orders of the Day — STATUTORY CORPORATIONS (FINANCIAL PROVISIONS) BILL

Not amended (in the Standing Committee), considered.

Clause 2

FURTHER COMPENSATION IN RESPECT OF FINANCIAL YEARS 1974–75

10.28 p.m.

Mr. Joel Barnett: I beg to move Amendment No. 1, in page 2, line 39, leave out 'financial loss' and insert 'loss of revenue'.

Mr. Speaker: With this amendment, it will be convenient to take the following amendments: No. 3, in page 3, line 11, leave out subsection (4).
No. 4, in page 3, line 20, leave out 'prospective deficit' and insert 'loss of revenue'.

Mr. Barnett: I am sure that every hon. Member is aware of the vital importance of the Bill. I have no doubt that all hon. Members have read the whole of the report in Committee and are aware of the inadequate replies which were given by Ministers. The amendment is identical to an amendment which was moved in Committee, to which we received an inadequate answer. I hope that we shall get a better answer tonight. Above all, the amendment was tabled so as to get the promised progress report from the Minister about the Chancellor of the Exchequer's discussions with the electricity boards on the price increases, about which he told us he was to have negotiations. The Minister promised us a progress report on Report or on Third Reading. I thought that it might be a good idea if the House had the progress report on Report so that when we reached Third Reading we should have a better idea of what the Government are about regarding electricity price increases.
The Minister of State, who spoke to us on this issue after the Chancellor of the Exchequer had spoken in the House on 17th December, said that price increases in, for example, the electricity industry would be allowed only in line with the

code—that is, increases would be allowed but no more than the deficit in 1972–73. In other words, the Chancellor of the Exchequer would not allow increases in electricity prices beyond what was allowed for in the code. We are therefore entitled to know, and I hope that the Minister of State will tell us, what this will mean in the coming year in respect of gas and electricity prices. I do not know whether the negotiations have finished, but I hope that the hon. Gentleman will be able to tell us something about them. We should like to know whether the Chancellor intends to bind himself by a code which is becoming more out of date daily and, if there is to be a change, whether the policy will be tougher.
We are told that stage 4 could well be and should be, not tougher than stage 1, but certainly tougher than stage 3. Many commentators have said that we may need again to have a freeze. I am not sure whether that is what the Chancellor has in mind, but I should not have thought that it was possible because to impose a price freeze for any period at a time of price increases such as the present would be absurd. The number of applications which the Department of Trade and Industry is receiving for exemption from the three-day working policy would be as nothing compared with the applications which would be received for exemption from a freeze. I assume therefore that we shall not have a freeze. If we had a freeze, how could the Chancellor of the Exchequer push ahead with what he said on 17th December about gas and electricity prices?

The amendment seeks to change the method of compensation—the subsidy. Instead of the deficit financing method, it proposes that payment should be made on a loss-of-revenue basis. No one will dispute what the Minister of State said in Committee—that there is a need to return to commercial targets at the earliest possible moment. However, the hon. Gentleman said that that could not be done "until circumstances permit". I do not know what circumstances he had in mind, but, given the present prospect about inflation, I should not have imagined that the circumstances were likely to permit of a relaxation of measures to restrain inflation.

I therefore wonder what the Minister of State had in mind when he talked about circumstances permitting us to return to commercial targets and fiscal discipline of a kind which we would all wish to see operating. In addition, I hope that the Minister will say what the Chancellor meant on 17th December when he talked about arranging help for the neediest households to meet increased gas and electricity prices. I shall be interested to learn how the Chancellor of the Exchequer proposes to protect the neediest householders from gas and electricity price increases.

The idea of deficit financing must be recognised as something which we should all like to see removed. My suggestion would mean a return to a commercial target and the target could be on the basis of a fixed percentage of capital employed. The prices could then be fixed accordingly, with any enforced reduction under the policy being met by subsidy, and that would be the amount of the subsidy. That would be the revenue forgone and there would still be some fiscal discipline.

The burden of the Minister of State's argument was put as follows in Committee. He said,
We will still have great difficulty in deciding precisely what is the amount of revenue forgone."—[OFFICIAL RFPORT, Standing Committee F, 11th December 1973 ; c. 68.]

But I submit that it is nothing like as difficult as forecasting a loss, as is intended in Clause 2. Forecasting a loss in a nationalised industry is not very difficult, and in fact is comparatively easy—but forecasting the size of the loss, which is what Clause 2 has in mind, is more difficult.

I hope that the Minister of State will think again about this matter. Indeed I hope he will be able to accept the amendment. Above all, he should be in a position to tell us a great deal more about the progress being made in the negotiations mentioned by the Chancellor of the Exchequer on 17th December—negotiations which will have such serious repercussions for so many households—if he is to substitute tax increases for price increases on the lines he has indicated.

Mr. J. Bruce-Gardyne: The hon. Member for Heywood and Roy-ton (Mr. Joel Barnett) contemplated the

possibility of stage 4—if that is the next number we move to—being a freeze, and said that the flood of applications for price increases under a freeze would make the flood of calls to the Department of Trade and Industry about the present energy restrictions pale into insignificance. However, he overlooked the possibility that perhaps we should be looking forward to the non-statutory corporations (financial provisions) Bill. If we can subsidise statutory corporations for their contribution to a prices and incomes restraint policy, presumably we can contemplate at a future date the taxpayer subsidising prices in the private sector to enable it to cope with a freeze.

Mr. John Biffen: Bread, for example?

Mr. Bruce-Gardyne: My hon. Friend mentions bread, and that is an obvious candidate. I do not think that that in itself is an overwhelming objection to that next phase on the perilous path on which we are engaged.
I am delighted that we have with us today the new Chief Secretary. I congratulate him on his new position. It seems to me peculiarly apposite that he should be with us in these discussions, because I am sure he will forgive me if I describe him as a poacher turned gamekeeper. He replaces a gamekeeper who has now turned poacher. Although I have some regret at the absence from these discussions of the right hon. Gentleman the new Minister for Energy, I shall be referring to him and shall find the inter-relationship between him and the Chief Secretary most interesting and constructive in terms of these discussions.
I confess that my attitude towards the amendment is somewhat schizophrenic. In Committee, I drew attention to the comments of a former chairman of one of the regional electricity boards who had ponted out very fairly that the technique of deficit subsidisation as proposed in the Bill, certainly in the past and to a limited extent in the future, represented a technique of giving the largest prize to those who ran the fattest deficits—in other words, a bonus for incompetence. That is a proposition which my hon. Friend the Chief Secretary, in his previous incarnation, was prepared to concede to me in correspondence.
In Committee, my hon. Friend the Minister of State pointed out very fairly that, quite apart from the complications of the computation of revenue forgone suggested by the amendment, a decision to compensate the statutory corporations in the Bill on the basis of revenue forgone would mean in practice treating them preferentially to the private sector.
That is established clearly when one considers the situation of the Giro. The Giro is currently forgoing revenue. It is even doing so because of its inability as a result of tariff increases recommended by Cooper Brothers as a precondition for the continued survival of Giro two years ago. In the interests of this bizarre policy it has had to forgo increases in tariffs which we were assured would take place as a precondition for the artificial resuscitation of the Giro.
If we said that the Giro was to be compensated for revenue forgone, we should say that the Giro would get this compensation based on a computation of what the tariff increases which should have occurred would have brought in revenue. At the same time the joint stock banks which are in direct competition with the Giro would have to submit their requests for price increases to Sir Arthur Cockfield and his merry men and, as we see at present, have them rejected not because they were unjustified on the basis of the price code approved, for better or worse, by this House, but simply on the basis that there was a comma out of place and the revenue which the joint stock bank was required to forgo as a result of the juggling with words of Sir Arthur Cockfield and his friends would not be compensated, yet the Giro would be in direct competition.
For that reason, I cannot find that the amendment provides a satisfactory answer to the dilemma on the horns of which my right hon. and hon. Friends have so elegantly hoist themselves.
However, before leaving this amendment, I suggest that we should devote a few minutes to a piece of evidence which has come to us since the Committee stage of the Bill, and then I want to say a word or two about the very important point which the hon. Member for Hey-wood and Royton raised about the precise

meaning of the statement on 17th December by my right hon. Friend the Chancellor of the Exchequer.
The new evidence to which I refer is the First Report from the Select Committee on Nationalised Industries. I am thinking particularly of paragraphs 56–72 and 108, which relate the consequence of the policy of price restraint on the finances and management of the nationalised industries in all its full horrific detail. A number of points relating to this report are relevant to the argument about the way in which we should try to regulate the compensation for the deficits of the statutory corporations under the Bill for the future.
My right hon. Friend the then Chief Secretary, now the Minister for Energy, said in paragraph 67 that there was
… still within the industries as firm a control over costs and as clear an incentive to maintain control over investment and to apply the financial criteria as there had been before
—before, that is, the introduction of price restraint. One is tempted to recall the riposte of the Duke of Wellington to the crossing sweeper in response to that comment. Clearly the Select Committee was not entirely prepared to agree with my right hon. Friend—

Mr. John Golding: The hon. Gentleman would add to his case by quoting what the Chief Secretary said immediately after that:
However, this could not be expected to last indefinitely.
Those words qualified what he had said about the performance of the nationalised industries. The Committee said that it welcomed the fact that the Treasury recognised the dangers of price restraint.

Mr. Bruce-Gardyne: I entirely agree, but it is a recognition which does not seem to have impressed itself to the extent of a change of view.
However, there is a more important point, more directly germane to our debate. My right hon. Friend in Committee tried to reassure us about one significant aspect of price restraint. He said that there was no evidence to date that it had had a distorting effect on the pattern of investment in the statutory corporations under consideration, particularly the electricity boards, in the sense of artificially stimulating demand and thereby generating the need for


investment in the boards over and above what would otherwise have occurred.
In paragraph 64, the Committee said:
… the Department of Trade and Industry would be seriously in error if it were to allow investment decision making to be based on the present artificially low prices.
I can only assume that the Committee felt it necessary to utter a warning because it could already see that that was beginning to happen.
In paragraph 65, my hon. Friend the Chief Secretary—as I said, his change of rôle is particularly apposite in the context of this debate—then Minister for Industry said:
If prices were too low, it created a demand on resources and for increased investment.
Yes, indeed.
Apart from the graphic picture in the report of the holocaust which has been created in the name of price restraint in the entire management and finances of the public sector, there is considerable reason for disquiet about the extent to which already the investment programmes are being distorted by artificially generated demand created by price restraint.
10.45 p.m.
I now turn to the subject of the remarks of my right hon. Friend the Chancellor of the Exchequer on 17th December. The hon. Member for Heywood and Royton did not quote them and I shall not do so extensively, but there was one crucial sentence to which the House must give its consideration. My right hon. Friend said:
At a time of the most acute energy shortage and in our present financial difficulties, it is anomalous—to say the least—that we are subsidising coal and electricity prices at a mounting rate".—[OFFICIAL REPORT, 17th December 1973; Vol. 866, c. 962.]
He did not say that it was anomalous—to say the least—that the electricity boards were not taking advantage of the extent to which the present rules and regulations might permit them to increase their prices ; he said that it was anomalous—to say the least—that that degree of subsidy of scarce energy resources should be taking place.
It was logical for the House to assume, and I think that many of us did at the time, that my right hon. Friend was making the clear and welcome pronouncement

that, in view of the energy crisis, special exemptions from the full rigours of the code would have to be applied to the electricity boards. But, as the hon. Gentleman has reminded us, in Committee my hon. Friend the Minister of State went out of his way to explain that, on the contrary, the price code applied to the electricity boards as if there were not an energy crisis and no shortage of supplies whatever. In other words, he virtually denuded my right hon. Friend's statement of 17th December of all specific meaning.
I hope that tonight my hon. Friend will be able to give us a measure of reassurance on this point. I press him again, as I pressed him in Committee—what precisely is the meaning of the Chancellor's statement for the sort of three-stage deflator that is applied to the prices of the electricity boards and other statutory corporations? May I explain to my hon. Friend exactly what I have in mind when I talk about a three-stage deflator?
First, the code says that the electricity boards, among others of the nationalised industry boards, shall not be treated pari passu as companies in the private sector that are in a loss-making situation. Is that unchanged as a result of the Chancellor's statement? The boards go to Sir Arthur Cockfield and his pals with their submission, which has to take account of the fact that they are not to be treated as are loss-making private companies. Are we to take it that Sir Arthur Cockfield will be strictly bound by the provisions of allowable costs and the rest as laid down in the code, as he has been in the past?
Then we have stage three—and perhaps that is an inapposite phrase—the third section of the pressure that is applied to the nationalised industries when Sir Arthur Cockfield says, "Yes, you are entitled to this increase of X per cent. under this wonderful code" and then my right hon. Friend the Minister for Energy, gamekeeper turned poacher, says "Ah, that is too much ; we could not have that and you must be content with £X minus 5, or £X divided by two". The result would be yet a third deflater. From which, if any, of these three successive phases—unfortunately, I cannot think of another word—of price restraint on the electricity boards does my right hon.


Friend's statement of 17th December offer exemption?
If my hon. Friend is unable to go further than he was going in Committee, I put it to him that all my right hon. Friend was saying on 17th December was that electricity boards may have a case, as may have the National Coal Board, for an increase in prices under our existing rules and that he was just reminding them they have such as a case, and, if they have, was going to encourage them to go ahead and press it. If that is all it means, it seems to me that part of my right hon. Friend's statement on 17th December is denuded of substance.
A further conclusion one must draw from the unhappy dilemma we are facing tonight is, it seems, this: in all sincerity I do not see that it makes a twopenny damn of difference whether we try to compensate the statutory corporations on a basis of deficit subsidisation or on a basis of deficit targets or on a basis of revenue forgone, as the amendment suggests. Therefore, in the unlikely event that the hon. Member can muster his scattered forces to press it to a Division, I cannot support the amendment ; nor, in all fairness, can I vote against it, because the proposition either way is meaningless.
There is another conclusion we should draw. My right hon. Friend now the Minister for Energy, in his evidence to the Select Committee on Nationalised Industries, said it was largely crying for the moon to expect Ministers not to intervene in pricing policies, with all the consequences we have seen. I am sure we must recognise the fatal temptations to which we expose civil servants and, indeed, Ministers, of whatever party, as long as we further extend the frontiers and fail to restrict the frontiers of the public sector economy.

Mr. John Golding: The hon. Member for South Angus (Mr. Bruce-Gardyne) has raised two important points, that of the damage which the Government's pricing policy for nationalised industries is doing to those industries and that of the effect on the investment programmes to which the policy this amendment seeks to amend is leading.
When we debated the Bill on Second Reading I assumed that the most deleterious effect of the counter-inflation

policy on the Post Office would come from the uneconomic pricing policy, but it is now apparent that the worst damage, of necessity, will come from the massive cuts in investment announced by the Chancellor of the Exchequer. It is my view that those cuts have been forced upon the Chancellor because of the pricing policies which have been pursued in the nationalised industries for the last two or three years. Had rational pricing policies been pursued there would have been no need for the cut to have been inflicted upon the Post Office.
Before describing the financial consequences of the cuts let me record that since the Standing Committee reported, the Select Committee on Nationalised Industries has issued a report on Investment Procedures—HC 65. I do not apologise for quoting extensively from the report, because the report directly comments upon the Bill. The comments are directed mainly, not to matters which we shall discuss on the next amendment, but to the pricing policies with which the Bill is concerned.
Paragraph 71 of the report says:
71. The crux of the matter is, of course, prices and incomes policy and Your Committee are well aware of the importance which successive governments have paid to it. Nevertheless, they feel obliged to point out that, if there were real benefits to be gained from the introduction of financial targets, there are real costs to be borne if they are abandoned, albeit temporarily. Similarly, having encouraged the industries to pursue rational, well thought out investment policies, the Government must recognise the dangers of allowing these policies to fall into abeyance. The short run exigencies of a combination of inflation and unemployment clearly have to be dealt with, but it is to be hoped that this can be done without too much consequent damage to the long term prospects of a very significant section of the economy.
72. Your Committee are concerned about the role of the nationalised industries within the counter-inflation policy. The effect of this has been to abrogate the previous financial policy and to leave the industries in a poor financial position, even in deficit. The arrangements for Stage 3 of the Price and Pay Code, may actually worsen the position of individual industries, depending on what price increases are acceptable to Ministers. Your Committee note the terms of the Statutory Corporations (Financial Provisions) Bill now before the House. One of the purposes of this is to compensate certain nationalised industries for the effects of price restraint on their finances and, in particular, deficits incurred as a result of it. Your Committee also note that the Bill will provide some alleviation to the industries concerned. Nevertheless, Your Committee see the Bill as a


short-term measure. They do not consider that planning in the medium or the long-term can be effective in the context of a situation of permanent price restraint coupled with occasional Government measures for compensation payments.
The Committee takes up the point again in paragraph 110:
Your Committee's concern is not however confined to the general criticism that the system of control embodied in the 1961 and 1967 White Papers has been eroded. At the same time as this has been happening, Governments have pursued policies which (however necessary they may have been in the national interest—which is not a matter for Your Committee to consider) have by common consent tended to compound the problems facing the nationalised industries. This applies particularly to the restraints placed on the industries, pricing policies (whether 'voluntary' or statutory), which have necessitated the abandonment of financial targets for the industries and which have almost certainly led in many cases to the distortion of demand and in consequence to the danger of badly based investment decisions. It is true that under the provisions of the Statutory Corporations (Financial Provisions) Bill the adverse financial effects of the policy of price restraint are now to be mitigated both retrospectively and for the next two years in respect of some major industries which have incurred deficits, but this does not alter Your Committee's conclusion that the imposition of the policy is bound to have had a distorting effect on investment decisions. Your Committee believe that the effects of this on the general morale of the industries are already discernible, and that if the present situation persists they may become very serious.
11.0 p.m.
I turn next to paragraph 111, and I make no apology for quoting further at some length from this report, because it was the result of an all-party investigation and very careful consideration. The Select Committee said:
Both the Ministers who appeared before the Sub-Committee recognised that the present position was unsatisfactory, but Treasury officials were hopeful about the prospects of an eventual return to a system of long-term objectives, even if this had to be preceded by a period when a system of short-term arrangements with each industry would operate. In the debate on the Second Reading of the Statutory Corporations (Financial Provisions) Bill, the Chief Secretary to the Treasury stated that it was the Government's 'settled intention to restore the industries to normal profitability …' and 'to return as soon as possible to somewhere near the previous system of long-term financial objectives, supplemented by corporate planning of the kind the industries are currently introducing'. Your Committee believe that the Government should make an early statement setting out the steps which they propose to take to restore the industries to profitability. In Your

Committee's view the process of returning to viability may be prolonged and difficult, and in any case they are far from convinced in the light of events over the last five or six years that the system of control developed in the 1960s will prove adequate to deal with the problems thrown up in the late 1970s.
It was obviously of great concern to the Select Committee that the Government's pricing policies would have an impact on investment planning. It is obvious also that the policy enshrined in the clause we now seek to amend would have a distorting effect on investment in the Post Office.
It is essential that there be long-term planning in the nationalised industries. In the summary of recommendations, the Select Committee said—this is recommendation (3)—
The Treasury and sponsoring Departments should take steps to ensure that corporate planning is used effectively throughout the nationalised sector",
and in recommendation (6) it said that—
All industries should have long term plans on which current policies are based and sponsoring Departments should encourage such developments and take the lead in promoting long term techniques.
Further, in recommendation (7), the Select Committee said that—
The nationalised industries should be encouraged by sponsoring Departments to take technological forecasting more seriously".
It recommended also—a matter of great interest to me—that there be a long-term planning embracing telephony, data transmission and the distribution of radio and television signals, and that this should be drawn up as soon as possible.
Those were the views and recommendations of the Select Committee on Nationalised Industries before the Chancellor announced his cuts. The Committee had studied just the pricing policies for the nationalised industries. It saw that those policies as they then existed would make it more and more difficult for the nationalised industries to plan, and more and more difficult for them to follow rational investment policies. It should be remembered that, in talking of nationalised industry investment decisions, we are talking in terms of thousands of millions of pounds.
That was the situation before the Chancellor's statement. My concern changed at the time of that statement,


because included in it was the announcement of a 20 per cent. cut in the investment programmes of the nationalised industries in the coming year. By any standards, that is a savage cut. Any business faced with such a cut in investment in the next financial period would be as shattered as I believe the Post Office management was when it heard of that decision.
I do not believe that these cuts would have been necessary if the demand in the economy had been cut by rational pricing policies in the nationalised industries. The cuts would not have come if the Government had permitted the nationalised industries to raise their investment funds from the consumer rather than having to go to the taxpayer via the Exchequer, or to Europe, thereby damaging the balance of payments.
It is necessary to spell out to the Minister of State the significance of the cuts to the Post Office. I am glad that the Minister for Posts and Telecommunications is here. I need not spell out the significance of the cuts to him because I was able to congratulate him on the occasion of the Post Office (Borrowing) Bill 12 months ago on being the last of the big spenders. At that time the right hon. Gentleman showed a full appreciation of the needs of the telecommunications service. I put that on record now because we must be clear, as the Post Office staff is, that the enemy of the Post Office is and always has been the Treasury.
I declare my interest in my connection with the Post Office Engineering Union. It is a matter of regret for many in that union, having gone into the public corporation on the promise that Treasury control would be reduced, that the brake that was constantly being put on by the Treasury would be less effective, that that has not come to pass. The cuts which have been imposed by the Treasury upon the nationalised industries, including the Post Office, which are consequent on financial and economic policies, have led to the most disruptive and disturbing cuts ever in investment in the Post Office.
It may be that the cuts and their timing will have had harmful consequences which the Government may well not have foreseen fully. There may be consequences for economic growth, for

the quality and cost of telecommunication services, for manufacturing industry, for employment, for management and staff of the telecommunications business, for the Post Office and, what is relevant and important to the Bill, for the future cost of the provision of telephone services.
In the view of the Post Office Engineering Union and, I should think, of staff generally, the size and timing of the cuts are such that they will bring so much harm that the Government would be justified in reconsidering their decision. Certainly the Government would be justified in rethinking in toto their failures towards the Post Office and all the nationalised industries. If they cannot reconsider pricing policy and the size of the cuts imposed upon the Post Office, the least they can do is to reconsider the timing and the rephasing for reasons which I hope to enumerate later.
I emphasise that telecommunications is now an essential strand in the nation's social fabric. It is a vital part of the economic infrastructure. It performs an essential service not only to manufacturing industry but to the financial sector, including banking and insurance, upon which we depend so much for overseas earnings. The demand for telecommunication services has in consequence been high. International experience shows that there will be no sign of slowing down for many years despite the artificially low tariffs. Even if those tariffs are raised to economic levels, international studies have shown that telecommunications will become increasingly important not only for industry and commerce but for dramatically reducing the cost of Government administration. Telex facsimile and data transmission are all recent developments which will bring about a revolution in industry, commerce and administration in the expected telecommunications explosion. It should also be borne in mind that telecommunications may become increasingly important as an alternative to road transport. It is a low energy user. It is pollution-free, and will not use scarce materials.
11.15 p.m.
But the importance of the rapid development of telecommunications in industry, business and commerce is in the growing use that there will be of automated processes and the reliance of data transmissions on automation. For many


industries in the 1980s efficient communications will be as important as energy is now. If the Government adopt this type of policy towards telecommunications in the 1970s we shall face in the 1980s a communications crisis in this country equivalent to the present energy crisis. It is important to recognise the dependence that there will be in industry and commerce on the development of telecommunications.
I have talked futuristically, but it is clear that at present Britain's telephone service, particularly the vital international telephone service, is still far from adequate, despite substantial increases in staff productivity, improved managerial performance and heavy capital expenditure. Some potential subscribers are waiting far too long for service. Sometimes they and others are forced to share a service against their wishes.
The quality of service from older exchanges sometimes leaves much to be desired, and congestion is a problem along many routes. Increasingly, businesses and professions ask for additional services which cannot generally be offered by the Post Office, although they are becoming available abroad. It was because it was aware of the need to improve the quality and range of services that the Post Office took the decision to invest in TXE4 development, a decision supported by my union and backed by the Government.
The Post Office telecommunications business, although proud of its recent progress, is well aware of its own shortcomings, the causes of which are to be found in the past. The deficiencies had their origin not only in the failure of the all-electronic telephone exchange in Highgate Wood, which was to replace the obsolescent Strowger exchange, but also in the capital starvation of the 1940s and 1950s and the way in which managerial initiative was stifled before the reorganisation in 1969.
Supported by successive Governments, since 1969 the Post Office Board has prepared an exciting, imaginative programme which, although it could not go far enough in attempting to achieve eventual technical integration through co-ordination, was nevertheless recognised to represent a big advance.
When presenting the Post Office (Borrowing) Bill a year ago, the Minister described the achievements expected in the next few years, achievements which, incidentally, assumed a growth rate of staff productivity of 5 per cent. The Post Office had in addition prepared a 10-year corporate plan which we understood, with certain reservations about the need for an integrated network, would have solved many of our problems.
If the cuts are made, both the plans announced by the right hon. Gentleman and the Corporation will be worthless. One cannot possibly devise plans which take into account such heavy cuts at such short notice.
While the union does not know how the Post Office will apply the cuts, it appreciates the difficulties that the board must be having in arriving at criteria by which to apply the cuts. Almost certainly at some point services for business, professional, commercial and administrative interests will suffer. As we are as a nation regretting some of the investment decisions taken in the energy industry—

Mr. Deputy Speaker (Mr. E. L. Mallalieu): I am sorry to interrupt the hon. Member. The amendment is about financial loss and compensation therefor. The hon. Member is discussing a very wide field of investment. Will he limit what he has to say to what is in the amendment?

Mr. Golding: Unfortunately perhaps I was following the hon. Member for South Angus (Mr. Bruce-Gardyne)—

Mr. Deputy Speaker: But at much greater length.

Mr. Golding: As I understand it, the question of length has never been a matter for the Chair. If one is tedious or repetitious—

Mr. Deputy Speaker: Perhaps I should have referred to the width over which the hon. Member has spread.

Mr. Golding: If you withdraw "length" and replace it with "breadth", that is a matter for you, Mr. Deputy Speaker.

Mr. David Crouch: The hon. Gentleman cannot tell the Chair what to do.

Mr. Golding: If the hon. Member for Canterbury (Mr. Crouch) wishes to make comments from a sedentary position, breaking the rules of the House in so doing—

Mr. Crouch: I had not thought of interrupting the hon. Member, because I have always thought the Chair should rule when a Member is out of order. I was extremely bored having heard the whole of this speech in Committee. The way in which this House acts sometimes makes the public ridicule our behaviour.

Mr. Golding: If the hon. Member had listened, he would have heard me say that the consequences of these cuts have come to light very recently indeed. Had the policies that we are seeking to amend not been followed, there would have been no necessity for the cuts. If one is following that line of reasoning the least one is permitted to do is to point out to the Government the consequences of the cut which has followed the pricing policy. If I had lengthened my speech by saying, "But had this policy not existed the policy of the Government would have been different," I submit that at no time would you have doubted whether I was in order, Mr. Deputy Speaker.

Mr. Deputy Speaker: Provided it was in moderate length. What the hon. Gentleman is saying does not seem to be directly connected with the amendment.

Mr. Golding: Perhaps I shall have to rephrase what are very serious arguments in another way.
If compensation is based on loss of revenue, the consequences to which I have referred need not follow. The cuts follow directly from the policy enshrined in the Bill—

Mr. Deputy Speaker: Perhaps they do, but we are discussing the question of compensation for loss.

Mr. Golding: Perhaps I shall have to go back to the beginning to illustrate the argument, but, given the Government's pricing policies, we are considering what the level of compensation should be. Why is it necessary to pay the compensation? For what is the compensation required? What is its purpose? Why do we want the computation to be made in the manner that we suggest in the amendment?

Many answers could be given to that question, but the one which I give is that we need the money in the nationalised industries in order to finance their investment programmes. We want to avoid cuts being made of the sort now being imposed. We want them to be in a position to invest without having to borrow money from Europe. The Post Office wants to borrow money in order to do certain things.
It is reasonable to talk about the damage to the telephone service and to telecommunications which will occur if investment policies are pursued which are inferior to those which would be pursued were sound financial policies to be adopted. It is important to state what the investment is required for. We have previously neglected investment in the energy industry. The policies enshrined in the Bill exclude the energy industry to a large extent because of the realisation that not only must energy be used properly but investment must take place.
Overseas countries pursuing rational policies are investing heavily in their telecommunication services. This is not the British Government's policy. The Government's decision to cut back will bear very heavily on the private equipment manufacturing companies because it will have an impact on the future costs of equipment for the Post Office. It is reasonable to point this out because the bulk of their orders come from the Post Office. Without strong home support they may do even worse in the export markets than they have been doing.
11.30 p.m.
In the past I have been very critical of the way in which the private sector has failed to provide exchange equipment at the right time at competitive prices. We recognise that this has resulted in heavy pressure being put on the industry by the Minister of Posts and Telecommunications, and in pressure being put on the Post Office to expand its capacity quickly to meet the demand of the telecommunications business. To be able to do this the Post Office has recruited and invested heavily on the basis of Post Office plans which existed before the announcements of the cuts.
I make no reference to the problems of the companies, but it is reasonable to


point out that this pricing policy, which has led to the investment policy will, in turn, increase the cost to the Post Office, to the extent that next year and the year after it will bring about disruption in the manufacturing industry.
Any increase in costs will be disappointing to the Post Office. All in the telecommunications industry are proud of the rise in productivity that has taken place in recent years. We believe that in the long term this policy must lead if not to a fall in productivity then to a rise in costs. The policy as contained in this clause is self-defeating. There are bound to be heavy additional costs for the telecommunications business, arising from these expenditure cuts. I repeat: these cuts follow directly from the pricing policy of the Government.
The equipment which will be cancelled next year will have to be installed at a later date, at increased cost, and the waste is bound to undermine morale among those who work in the telecommunications business.
This, and the other provisions in the Bill, will have one other effect. This Bill and the policy of cuts that it enshrines—and here the Select Committee was quite precise about the general position—will make it impossible for the present forward-looking mood that prevails amongst both management and Post Office staff to continue. It is impossible to have a clause that permits only the losses to be paid and to expect managers, faced at the same time with investment cuts, to run the business in a mood of optimism, because they are faced with a situation in which all their plans have to be scrapped and, at the same time, they are told by the Government, "Whatever money you lose will be made good." But what we shall—

Mr. Deputy Speaker: Order. It is a long time since I asked the hon. Member to confine himself to the amendment, which is about the basis of compensation, but he persists in talking about losses and why they are made.

Mr. Golding: With respect, Mr. Deputy Speaker, I am now absolutely on the amendment.

Mr. Deputy Speaker: I hope that the hon. Member will remain so.

Mr. Golding: The amendment is to leave out "financial loss" and insert "loss of revenue". It is absolutely in order to talk about the difference facing management in a situation in which the Government say, "We will make up any losses you make" and one in which they say, "We will not compensate you for loss of revenue". That is a quite different situation. One can understand the Government's point of view but it is a situation which, I understand, was debated in Committee and which is germane to the argument.
I speak feelingly because I think that the policy contained in the clause and the implications of that policy will lead to loss of morale throughout the nationalised industries to which it appertains. The Government are saying—I explain it to you, Mr. Deputy Speaker, because I obviously have not made myself plain—that they are prepared absolutely to meet a loss or deficit ; if the Post Office makes a loss and that loss is recorded, they will make up that loss. It is a blank cheque. Losses will be paid for which arise from the pricing policies of the Government.
The Government are not saying to the nationalised industries that, if they increase their turnover and that turnover with economic policies would lead to an increased surplus, they will get that surplus. All they are saying is that they will meet any book losses. That is a very different situation, which will bring about despair in the Post Office and the other nationalised industries.
I conclude—[HON. MEMBERS: "Hear, hear."] I do not apologise for these arguments. It is most regrettable that in the Commons a serious argument affecting an industry of this nature cannot be made in this way. It would have been much easier for me tonight to have filibustered, as I did in Committee—speaking not seriously, but within the rules of order—and I am tempted to do it later to show what a mockery the rules sometimes bring us to in this House. I do not apologise, because I have been making what I believe to be a serious contribution affecting the livelihood of many thousands of people.

Mr. Deputy Speaker: Order. Instead of defending himself, will the hon. Member finish up on the amendment?

Mr. Golding: I shall conclude, Mr. Deputy Speaker, by saying that I think these amendments are important and that the arguments on them should be listened to very seriously indeed.

Mr. Arthur Palmer: I intend to speak fairly briefly on one or two points which arise on the amendment and which certainly affect the one nationalised industry with which I am familiar, the electricity supply industry. I spoke on the Second Reading of the Bill and, I suppose as a punishment, I was duly appointed to the Standing Committee. But I did not serve my term there because I had to go away to act as Chairman of the Energy Sub-Committee of the Select Committee on Science and Technology, which was regarded as a legitimate reason for absence. Therefore, I missed the contributions made in the Standing Committee on these points, including the most detailed contributions made by my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding).
While I was in the Chair of the Energy Sub-Committee some interesting evidence was given by Mr. Arthur Hawkins, the Chairman of the Central Electricity Generating Board. He was questioned on the reasons for extra investment in electricity supply—investment which, some months earlier, in evidence to the Select Committee on Science and Technology, he said would not be so necessary because loads were not rising fast enough. When he was questioned whether the restraint on prices had contributed to this surge forward in electricity demand, he said—and I am speaking from memory—that he felt it had a bearing on the situation.
Therefore, it is absurd for Ministers to argue, as they appear to be arguing, that at a time when prices generally are rising, the price of electricity can be artificially restrained, without the demand rising proportionately, thus influencing the need for extra investment which at present interest rates may be very expensive indeed. It is a charge which the Government must take seriously.
I wish to make a further point about the electricity supply industry relating to the amendment, namely whether we should compensate for the loss as measured, which is a premium to the inefficient—a point reasonably made by

the hon. Member for South Angus (Mr. Bruce-Gardyne)—or whether we should accept the measured actual loss of revenue. My feelings on this matter are divided. In terms of electricity supply I do not think it will make a great deal of difference, if only because of the fact that at present we have an emergency which is distorting demand over the 24-hour period and where the normal will be hard to define.
Electricity supply—one of the principal industries affected by the amendment—is in a special position because it cannot pick and choose its markets. It is under a statutory obligation to supply every consumer who demands a supply. It cannot escape by saying, "This is not the kind of market in which we wish to operate. We do not want this particular consumer if we can avoid having him." The consumer must be accommodated. When there is an artificial restraint on prices, one is saying to the electricity supply industry, "You must go on connecting because that is your statutory obligation, but you must also carry the financial loss that is incurred." Hence the greater the activity, the greater the loss.
11.45 p.m.
A further objection to the policy whether it be taken on one form of measurement of loss to the industry or another, at a time when all other prices are rising, of artificially restraining the price of electricity—apparently the Government are prepared to subsidise the price of electricity but they shrink from subsidising the price if food—is that it encourages waste.
From the general point of view of the national interest, energy prices should not be held down for if this country is to embark seriously upon a policy of conserving energy resources, we may have to let energy prices rise to make sure that energy is better utilised.
Knowing the experience of my hon. Friend the Member for Newcastle-under Lyme, I do not stray too far down this path, but I have great difficulty in understanding why it should be argued that it is necessarily in the national interest artificially to hold down the price of energy. Considerable savings could be achieved by industrial, commercial and domestic users if they looked at the efficiency of


their utilisation. If that were done it would bring about a reduction in their bills equal to anything which might be achieved from an artificial Government subsidy.
Reference has been made to the evidence given before the Select Committee on Nationalised Industries, especially that given by the present Minister for Energy who at the time was Chief Secretary to the Treasury. He made some remarkable confessions in his evidence. He said, for example:
Ministers have been interfering a great deal too much in the last two or three years
—it is difficult to believe that he was one of the Ministers doing I he interfering—
I should have thought this would almost go without saying. The justification is that higher priority must supervene, namely, the need to seek to control inflation.
I have taken a great interest in these matters over the years and I have never believed, except in the case of major matters affecting the national interest, that it was legitimate or normal for Ministers to interfere in the day-to-day running of nationalised industries and in their pricing policies. Therefore it is remarkable for a responsible Minister in what passes for a responsible administration to say to a Select Committee, "We are under a kind of compulsion. We cannot help doing it. It is wrong to do. Nevertheless we do it, and we do not know how to stop doing it."
If this is to be the practice, Parliament should give some new guidelines to the nationalised industries. We should have to depart from the statutory provision that Ministers should intervene formally only when there is some over-riding issue affecting the national interest. There would have to be defined areas in which the Minister was allowed to intervene even on day-to-day questions.
The more this policy is examined, by whatever method one compensates, the more absurd and ridiculous it appears to be. If at the end of the day there were any satisfactory proof that the policy was restraining inflation, at least there might be something to be said for it. But inflation still marches on apace and at the same time the proper administration of the nationalised industries, the morale of the staff and everything to do

with the comparability of the efficiency of one industry with another are suffering.
Therefore, if my hon. Friend presses the amendment to a division—

Mr. Joel Barnett: Mr. Joel Barnett indicated dissent.

Mr. Palmer: He is shaking his head, so presumably he does not think that he should take it that far, but I would certainly have voted for it even though I think that the important question is not so much the alternative methods of measuring the loss to the nationalised industries as to ask once again why the policy should be operated at all.

Mr. Joel Barnett: We are not arguing whether the prices should be allowed to rise to the unsubsidised level, because that is not what the Government suggest. They are suggesting that they should rise to the maximum allowed by the code. We are arguing only about how any deficit should be financed.

Mr. Palmer: I am obliged for that correction. But I am doubtful about the policy in general. Until 1972, under administrations of Government, my industry had never once gone into the red. In 1972, we were driven into a loss situation, and were only just about clear in 1973. I shudder to think what the loss will be in the coming year in electricity supply under the present Government and its own peculiar brand of interventionism.

The Minister of State, Treasury (Mr. John Nott): Every hon. Member who served on the Committee on the Bill will agree that we have discussed it exhaustively. Both on Second Reading and in Committee, neither my right hon. Friend the previous Chief Secretary nor I sought to disguise our concern about the effects of open-ended deficit financing on the morale, efficiency and management of the nationalised industries. I recognise, as have my right hon. and hon. Friends, that if a policy of price restraint were to continue indefinitely, the pattern of demand between one industry and another and investment in the nationalised industries would be distorted.
I made it clear in Committee however that I did not believe that any such distortion had so far occurred. I must emphasise again that the capital expenditure programmes of the electricity industry are set out in Cmnd. 5519, the public


expenditure White Paper, as indeed are the capital expenditure programmes of the Post Office. I repeat, without any qualification, that these capital expenditure programmes have not so far been increased on account of price restraint and consequent inflated demand.
The point that I have made all along is that there is a serious potential risk that this will happen. Certainly I do not deny—I have not denied in Committee and I do not deny it tonight—that there is a medium-term danger of the distortion of demand between one industry and another if the policy of price restraint as we have recently had it continues for an indefinite period. There is no argument between us about that. In the medium term, I repeat, I would not dissent from the argument that my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) is advancing.

Mr. Joel Barnett: Is the Minister of State saying that price restraint should not continue beyond the medium term? If so, would he give us his idea of medium term?

Mr. Nott: On Second Reading I dealt with the whole subject of the distortion of demand in the fuel industries and said:
I must emphasise that consumer demand for fuels is relatively price-inelastic in the short term. The reason is clear enough: people become committed to one form of heating or lighting and they do not readily alter their consumption patterns if relative prices vary."—[OFFICIAL REPORT, 21st November 1973 ; Vol. 864, c. 1447.]
I am saying only that the public expenditure White Paper sets out the capital expenditure programmes of the fuel industries and I deny that in the immediate situation that we now face there has been any distortion of the investment programmes of the industries.

Mr. Bruce-Gardyne: I put it to my hon. Friend that he must not cite the public expenditure White Papers in this context as evidence to support his argument, because it has always been the proposition of successive Treasury Ministers that public expenditure White Papers simply extrapolate the consequences of existing policies and make no assumptions about adjustments in policies which might be necessitated by present

circumstances. It does not strengthen his case to cite public expenditure White Papers.

Mr. Nott: I repeat, in the short term, consumer demand for fuels is relatively price-inelastic, and I cannot go beyond that. I accept that in the medium term my hon. Friend's fears may well be justified. Clearly, over a period distortion of demand for a commodity occurrs, if a policy of price restraint continues indefinitely—

Mr. Palmer: The hon. Member is overlooking an important factor. Again I take the electricity supply industry as the best example. Investment policies are made not for next year, but for seven or ten years ahead. The evidence of what will be required seven or ten years ahead is what is used this year ; that is the starting point. Therefore, if this year's consumptions are distorted and adjustments are made all the way ahead, in ten years there will be a completely false picture.

Mr. Nott: The hon. Member is not making an unfair point. I am merely saying that the figures published in the public expenditure White Paper show the investment necessary to meet the demand that we expected last summer on the basis of the normal price levels to which we expect electricity and the Post Office and other tariffs and charges to return in due course. Certainly in compiling the public expenditure White Paper and deciding what future investment programmes of the nationalised industries should be we have to bear in mind existing price restraint in those industries. On Second Reading and in Committee I emphasised that the Government were genuinely seeking a way in which to return to some sort of long-term targets for these industries, because that is naturally what both sides of the House would wish.
12 midnight.
The immediate problem is to find a suitable régime in 1974–75, because that is the limit to which the Bill takes us. None of us likes the consequences of the Bill, but that does not mean that the policy of price restraint was not necessary in the world-wide inflationary conditions from which we have been suffering. We cannot consider the public


sector in isolation, nor can we treat the nationalised industries as being any other than a crucial element in the economy generally.
The Select Committee was obviously not concerned with considering the wider issues of the prices and incomes policy. It was concerned, and very rightly so, with the problems of management, morale, and efficiency in the nationalised industries. We as a Government are concerned with the economy as a whole, and with the attitudes of management and workers. I do not believe that the CBI, for instance—I hope I shall not provoke my hon. Friend the Member for South Angus, but I must say this—would have been able to persuade its members to agree to its price restraint initiative if the prices of the nationalised industries had not been restrained. Nor, likewise, do I believe that we should have secured the acquiescence of the trade unions to the standstill in stage 2 if the prices of the nationalised industries had not been restrained.
I understand what the Select Committee is saying. Within the context in which it was considering the issue, I think its judgments were to a very large extent correct, but I must not be drawn at this stage into giving the Government's reply to the Select Committee's Report. That will come in due course. I want to say a little more about the report in a moment.
At Second Reading and in Standing Committee I asked that the Standing Committee should put forward its ideas for the 1974–75 financial year, and the hon. Member for Heywood and Roy ton (Mr. Joel Barnett) joined in the spirit of that offer. He criticised the approach I outlined at one stage of a target deficit for 1974–75. That was one of the suggestions I made as being a possibility when I wound up the Second Reading debate. Then he put forward in Committee what I would describe as a variation of the compensation-for-revenue-forgone formula. On that occasion he had in mind, I think, that an industry would receive what it calculated to be the difference between the revenue it would have earned if it had been treated under the price code like a private sector undertaking and the revenue accruing from a price increase it was actually permitted to make. As I promised to do, I

have examined this idea, and I wish quickly to refer to it in a moment.
Before doing so, let me quickly comment on the admendment itself. As my hon. Friend the Member for South Angus said, the amendment would single out nationalised industries for more favourable treatment than the private sector. This Bill proposes to compensate nationalised industries for a substantial disadvantage which they have compared with the private sector under the code. Thus in this way the Bill seeks to enable them to meet their statutory obligations. To go further and to compensate the industries for all their losses of revenue would put them in a preferential position over the private sector, because private sector firms are also suffering from loss of profit because of price restraint. Members of the Opposition are not suggesting that the private sector should be compensated on that account.

Mr. Joel Barnett: Would not the Minister of State accept that the nationalised industries are dealt with more severely under the code than private industry?

Mr. Nott: Yes, I would not deny that the price code has borne more heavily on the nationalised industries than on the private sector. It has done so by preventing them from eliminating their losses and meeting their statutory obligation to break even, taking one year with another. That in no way nullifies what I have said—that if we were to compensate the nationalised industries for revenue forgone we would be putting them in a preferential position over the private sector.
In any case, the main argument against the amendment, as I said in Committee, is that to calculate what the figure would be of revenue forgone is an almost impossible task. I will not say that it is impossible, but it is virtually impossible, because the costs of the nationalised industries run into hundreds, nay thousands of millions, of pounds and each and every one of those costs will have been affected in one way or another by price restraint generally.
In theory I can see that the hon. Gentleman's ideas have attractions. I do not deny the attraction of the theory of compensation by revenue forgone, but in practice it would place the Government in the position of having more or less to


accept any figure given them by the industry itself. Of course I accept that it is the same sort of criticism writ large as the hon. Gentleman made of my idea for a target deficit.
The hon. Member for Heywood and Royton referred to a modest young accountant—no doubt he was not referring to himself—being able to have a field day and produce a pretty considerable safety margin for the nationalised industry for which he worked. It is also true to say that he would have the field day of all field days when it came to presenting to the Government what his own industry's estimate of revenue forgone had been in the circumstances which have been prevailing.
Moreover, in a period of one year—we are talking here of one financial year, 1974–75—random factors such as the weather can far outweigh any influence which management can bring to bear. This difficulty faces any short-term objective, but it is nevertheless a perfectly valid point for me to make as regards the problem of the Government's agreeing the estimates of the nationalised industries.

Mr. Golding: I take the point, but can the Minister of State tell me what effect this would have on the loss of revenue to the telecommunications services in 1974–75?

Mr. Nott: I endeavoured to follow the hon. Gentleman's speech. I am reluctant to be drawn into it too much because, as Mr. Deputy Speaker said, much of it was out of order. Let me try to deal briefly with one or two of the hon. Gentleman's points.

Mr. Golding: That is a rather cheap way of seeking to get out of answering a specific question I addressed to the hon. Gentleman. He referred to the greater importance of the weather and talked about the difficulty of forecasting revenues. I asked him a specific question. On his speech—not mine—what would he estimate the impact of changes of weather to be on telecommunications in 1974–75?

Mr. Nott: I am sorry, but I did not say that the weather was a crucial element in making a one-year objective impossible. I merely gave that as an example of matters clearly affecting the gas industry,

the electricity industry, and so on. The point is still valid that the hon. Gentleman, with his great knowledge of the Post Office, would not at any stage suggest that it is possible to draw up a long-term management and efficiency arrangement for the Post Office for what we are concerned with here, which is a period of one year—1974–75.
If the hon. Gentleman or his treasurer friend in the Post Office were to present to the Government a figure of the revenue forgone by the Post Office as a result of price restraint, that figure would be almost impossible for anyone to check. That is the point I was making.
My hon. Friend the Member for South Angus and the hon. Members for Newcastle-under-Lyme (Mr. Golding) and for Bristol, Central (Mr. Palmer) referred to the Report of the Select Committee on Nationalised Industries on the capital investment procedures of these industries It is an excellent report. As the House knows, the Government will in due course publish their answer to it, and they are at the moment examining the report.
The Select Committee drew attention to the problems caused by price restraint for the nationalised industries, but it did not, I think, make any specific recommendations on the subject. What Ministers have genuinely been seeking to do on this Bill is to draw in all the suggestions we can find from all sources as to how we can return to long-term targets and how we can devise a new incentive system. The action we now have in train on prices, which was announced by the Chancellor of the Exchequer, seems to be entirely in line with the Select Committee's thinking. It remains our intention to restore the relationship between the central Government and the nationalised industries to a more normal footing as soon as conditions permit.
This gives me the opportunity to say that, since the Bill was brought in, circumstances have altered dramatically. Not only has the present fuel crises rendered many of the earlier figures somewhat doubtful but the measures forecast by the Chancellor on 17th December include action to increase public sector prices within the limits of stage 3. As the Chancellor said, it is no longer appropriate to subsidise the nationalised


fuel undertakings on a large and growing scale at a time when energy is in short supply and world fuel prices are rising.
The hon. Member for Heywood and Royton said that I promised in Standing Committee that I should take this opportunity to give the House a progress report on the negotiations with the nationalised industries which followed immediately upon the Chancellor's announcement. I regret that the early Report stage which we are now having means that I cannot tonight report to the House, much as I should like to, any firm progress. The discussions are continuing along the lines indicated by the Chancellor, and all the nationalised fuel undertakings are being brought fully into consultation. But it will still be some weeks before we are in a position to make a final statement on the matter. On the question of nationalised industry prices, however, I can confirm once again that we have no intention of amending the code.
My hon. Friend the Member for South Angus asked several questions, and I think that I can best summarise in this way the answer which he requires. The code provides for price increases not less than is needed for the recovery of allowable costs and not more than is required to contain the deficits of the nationalised industries at the level of 1972–73.
12.15 a.m.
In the normal course the industry will obviously apply for the maximum increase which it will be entitled to. But there is provision in the code for the responsible Minister to intervene to cut back that increase to the lower limit of allowable costs as established by the Price Commission. Within those two limits, what I described in Committee as the parameters of the code, there is considerable scope for ministerial manoeuvre.
My right hon. Friend's statement implied quite clearly that Ministers would now tend to take a somewhat less restrictive attitude towards price applications than they have taken in the last few months and my right hon. Friend's statement has been followed by discussions with the industries. The parameters I referred to in Committee enable the price increase to be within the parameters of the code, and so, I repeat, there is no intention of amending the code in that

respect. However within stage 3 quite substantial increases are possible.
My hon. Friend asked me three specific questions. Is the private sector pari passu with the private sector? The answer, as I have already said, is that the nationalised industries and the private sector are not pari passu under the code. He asked whether the industry had still to go to the Price Commission and be guided by the code? The answer is "Yes" and the application must be within the code. He referred to ministerial intervention. I have already explained that my right hon. Friend's announcement, in my own words, indicates that Ministers will in the future indulge in a self-denying ordinance in connection with their right under the code to bring price increases back to allowable costs.

Mr. Joel Barnett: Will the Minister tell us, accepting as we do that the negotiations have not ended and that the price increase is not known, but within the parameters he has explained under the code, what is the maximum price increase which would be allowed?

Mr. Nott: It is not possible for me to give the actual figures. By reference to the code the hon. Member will see that we are taking as a maximum the 1972–73 deficits. The minimum is allowable costs.

Mr. Bruce-Gardyne: I am grateful for that further information. May I paraphrase what my hon. Friend has said? Up to now Ministers have intervened after the Price Commission has adjudicated to tell the nationalised industries concerned, but primarily the electricity boards, that they cannot have the increase to which the Price Commission says they are entitled. Now the fixing between the Ministers and the boards will take place before going to the Price Commission.

Mr. Nott: I confess to having stumbled a little on this point on Second Reading. However, I have no information to add to our somewhat lengthy discussion on the matter in Committee. I made clear then and I do so again that the minimum is allowable costs and that the maximum is adjustment up to the 1972–73 deficit. I have throughout repeated that to my hon. Friend.
There is one small point which the hon. Member for Heywood and Royton raised. It related to the help for the neediest households. I told him in Committee that we would give consideration to this. My right hon. Friend the Chancellor undertook to do so in his statement on 17th December as soon as the extent of any price increase was known. We cannot make any decision on what the degree of help should be until the decision is made about the level and extent of the price increase, as I mentioned in Committee.
I hope that the hon. Member for New-castle-under-Lyme will forgive me if I am not drawn too much into his questions. My right hon. Friend the Minister for Posts and Telecommunications listened with great care to everything the hon. Gentleman said about capital investment in the Post Office. I, too, listened with great care. The hon. Member repeated many of the points he made in Committee and many of those points were answered by my hon. Friend the Under-Secretary of State for Trade and Industry.
I could not follow the hon. Gentleman's assertion, when he was talking about investment cut-backs in the Post Office, that price restraint must lead to cut-backs in investment. That is the opposite of the argument that the hon. Member for Bristol, Central and every other hon. Member was adducing. Other things being equal, it must be right that price restraint leads to an increase in capital investment and not a cut-back. At Question Time my hon. Friend the Chief Secretary to the Treasury, in answer to the hon. Member for New-castle-under-Lyme, said:
Yes, I am aware that it creates problems within the Post Office. My right hon. Friend the Minister of Posts and Telecommunications is discussing this matter with industries concerned."—[OFFICIAL REPORT, 17th January 1974 ; Vol. 867, c. 905.]
That is the present position. The hon. Gentleman has made his point and it has been heard by my hon. Friend. I hope that I may leave the matter there.
In rejecting the amendment I do not do so in any captious spirit. The Opposition, on this occasion, are genuinely attempting to be loyal, if I may put it in that way. They say, not unreasonably, that so far the Government have

not provided any firm proposals for 1974–75—that this is what the Opposition would like to see. I understand that.
Since the Bill made its first appearance before the House, we have announced our intention to discuss price levels with the industries. That must be the first step towards a long-term arrangement of the sort which we all wish to see. In the meantime we are continuing our discussions with the industries. I can undertake that as soon as those discussions on prices come to a conclusion a statement will be made to the House.

Mr. Joel Barnett: With the leave of the House, Mr. Deputy Speaker, may I reply? Points have been made by the hon. Member for South Angus (Mr. Bruce-Gardyne) and the Minister about statutory corporations having preference over private companies. That is an argument which I find difficulty to accept, bearing in mind that statutory corporations are permanently at the disposal, as it were, of Governments of whatever colour. I find it hard to accept that statutory corporations somehow have a preference over private industry.
The point was made by my hon. Friend the Member for Bristol, Central (Mr. Palmer) and the Minister about distortions created by price restraint. I find it a little difficult to understand the Minister's argument. My hon. Friend made it clear that he wanted to see us get back, given the present energy crisis, to non-price restraint. The Minister told his hon. Friend the Member for South Angus that it would have been impossible to obtain the co-operation of the CBI and the TUC in any kind of voluntary incomes restraint if the Chancellor had not done something about price restraint, for example, in the gas and electricity industries.
The Minister now tells us that the Chancellor has decided, given the current state of affairs, to allow substantial—I assume they are substantial, otherwise they would hardly be worth talking about—increases in gas and electricity prices. If it were relevant before that it would be difficult for the CBI and the TUC to go along with prices and incomes policies, how much worse will the position be in 1974 when levels of inflation are almost certainly to be considerably in excess of what they were in 1973?
Some of the gloomy forecasts may not come true, but I doubt whether anyone will be so optimistic as to assume that price inflation in 1974 will not be substantially in excess of the 1973 level. The Minister says, despite what he had previously argued about the need for restraint so as to get co-operation for a prices and incomes policy, that because of different circumstances he can allow substantially increased prices. It is a somewhat confused argument and not one which I can accept.
I do not disagree with the Minister that these are complicated calculations, as are his own. But they apply, as he said, only in the short term. The advantage of my proposition is that there would then at least not need to be further monies provided for capital investment, as happens now, when the industries are simply financed to make good the deficit and are then obviously short of funds for new investment, and the Government must find them.
However, in view of the hour, and as we have had a pretty good debate on the matter now and in Committee, and have a long way to go yet, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4

EXTENSION OF BORROWING POWERS OF CERTAIN STATUTORY CORPORATIONS

Mr, Joel Barrett: I beg to move Amendment No. 6, in page 5, line 1, leave out Clause 4.

Mr. Deputy Speaker (Sir Robert Grant-Ferris): With this amendment we are to discuss Amendment No. 8, in page 5, line 6, leave out paragraph (b).

Mr. Barnett: Amendment No. 6 is exploratory. The clause is the one that provides the Government with the power to encourage statutory corporations and others to borrow abroad with the assistance of the Treasury. Shall we need the clause to the extent originally envisaged if, as is sometimes said, and as the Chief Secretary to the Treasury intimated in answer to a Question last Thursday, there is a possibility—I put it no higher—of a loan from the International Monetary Fund? That loan would obviously need to be substantially larger than anything

likely to be borrowed by corporations with the assistance of the Treasury.
Even though substantial sums have been borrowed, anything likely to be needed by the Government in the coming years to sustain their deficits would need to be substantially higher than is likely to be borrowed by corporations under the clause. At least, I assume that, unless the Minister can tell us that they hope to finance the whole of their deficit over the coming years by this method. I should be surprised if that were so.
The Government's case on the balance of payments is incredible. Another disastrous trade deficit, of about £330 million, was announced today, and we have heard yet further excuses. I suppose that the Secretary of State for Trade and Industry will never run out of excuses, and that diamonds will for ever remain the right hon. Gentleman's best friend. He managed to find them again today as the reason for the deficit.

Mr. Bruce-Gardyne: Did my right hon. Friend use diamonds again?

12.30 a.m.

Mr. Barnett: Yes—at least, according to the tape, which is the best information I have so far. We must have had a hell of a lot of diamonds in this country over the past 12 months—diamonds and ships or whatever. Perhaps they were industrial diamonds, or perhaps the tape got it wrong. If there was another excuse, I should be happy to hear it.
Nobody will dispute that the country was running a serious balance of payments deficit before the oil situation began. I am sure that hon. Members did not need the Governor of the Bank of England to tell them. We can see that we shall be having next year a non-oil deficit of about £2,500 million, plus possibly £2,000 million or more as a result of the increased oil prices. That is the level of the sums which over the next few years we shall have to finance. By comparison, the amounts that so far have been borrowed, large as they are, under the same arrangement as that embodied in Clause 4 are a drop in the ocean.
If the House is to give the Government this power, we are entitled to know how they intend to use it. We have not had it made clear to us yet. In


Committee we did not have sufficient time to go over it in the detailed way one would wish, but the Minister of State in Committee told us:
I know that some of my hon. Friends took a different view when we were in opposition
—he meant some hon. Gentleman opposite, including some on the Front Bench, who took a different view about borrowing which is likely to change even more in the coming months when we hear of further substantial borrowings—
but I have never seen how it can be wrong to borrow abroad when there is known to be a substantial net outflow on capital account."—[OFFICIAL REPORT, Standing Committee F, 20th December, 1973 ; c. 178.]
The Chief Secretary did not quite put it in that way when we discussed the matter on Second Reading. The Chief Secretary referred to it as meeting deficits on current account. He said:
This is essentially a matter of general economic strategy. In a period when the economy is expanding rapidly and, in particular, when the terms of trade have been moving substantially against us, deficits on current account must be expected. Financing the deficit requires the use of foreign currency reserves, and the simple and straight-forward point is that foreign currency borrowed increases our reserves. The current account deficit in the first 10 months of the year has been almost fully covered from this source."—[OFFICIAL REPORT, 21st November ; Vol. 864, c. 1356–7.]
So it seems that the Chief Secretary is borrowing for the current account and the Minister of State for the capital account. Which one is right? Which one are we borrowing it for? It would be interesting to know just what the Minister of State has in mind. He often, pleasantly, moves away from his brief and he is rather better when he does. Perhaps he has something different in mind from the Chief Secretary or, indeed, anybody else on the Treasury Bench.
We also heard from the Chief Secretary at that time that the borrowings under Clause 4 were sound borrowings. Given the way in which they were borrowed, the currency in which they were designated for repayment—the major one being a floating loan, as it were—and our substantial devaluation against the dollar in recent weeks, I wonder whether the Minister is still prepared to say that these were sound borrowings, or whether, with the benefit of hindsight, he considers that

there were better ways of borrowing the money required.
I made it clear in Committee that I believe there is a case for borrowing. I do not agree with the hon. Member for South Angus and the right hon. Member for Wolverhampton, South-West (Mr. Powell) and others who argue that rather than borrow in this way we should use what is euphemistically called money supply. But whether we say that we should use money supply, or cut public expenditure and personal consumption and balance the budget, we need not borrow by reducing the money supply through the measures we take.
I would not want that to happen at the pace desired by those who argue for the use of money supply because of the horrific levels of unemployment which would be created if it were done quickly. I would rather have some borrowing balanced with some cuts in public expenditure and some cuts in personal consumption, which I believe to be inevitable. But I would not want to do it at the sort of pace which would create massive unemployment implied—I put it no higher—by the exponents in the House of money supply.

Mr. Bruce-Gardyne: The hon. Gentleman is making a fairly false comparison. I do not think that in Committee or at any other time—and I think that this applies to my hon. Friends—have I suggested that there was a choice between the use of monetary policy and borrowing overseas. That is not the equation which presents itself. In any case, as far as I am aware, those who have advocated the observance, among other things, of monetary discipline have always emphasised that it would be highly undesirable to use such a discipline speedily and thereby try to achieve a rapid cure for inflation. Many of us have argued that the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) fell gravely into error in trying to do that in 1969–70.

Mr. Barnett: I am delighted to hear that that is not the hon. Gentleman's view, but I should be surprised if it was not the view of some of those who have advocated more forcefully the use of money supply. I accept the need for some borrowing rather than expect to correct a balance of payments deficit of the enormous magnitude we are likely to have in 1974, and, indeed, for a number


of years beyond that, even if I am not prepared to go to that great year of 1984 which the Governor of the Bank of England seemed to like.
Therefore, I am not prepared to take the opportunity of reversing the strictures which hon. Members now on the Treasury Bench used to place on Labour Ministers who indulged in large borrowings between 1964 and 1970. No doubt that will come from some of my hon. Friends—they may not be able to resist it as I am able to—especially when the borrowings in the next few months are likely to be considerably in excess of anything borrowed between 1964 and 1970. But that is another matter.
I wish to hear from the Minister what the Government propose with Clause 4 in relation to other borrowings which are almost certain to be required in the next few months.

Mr. John Loveridge: I hope that my hon. Friend will forgive my intervening at this late stage in a Bill that I have not followed through in detail before, particularly at this moderately late hour, but when, earlier this evening, I looked at Clause 4 I could not help feeling a certain sense of misgiving. Subsection (1)(a), speaking of extended borrowing powers, provides that the Act will extend
to the borrowing of money in a currency other than sterling from any person and in any manner
Those words are hardly an encouragement to thrift. Whatever Treasury controls and consents may be required, one cannot help feeling that the words imply a possibility of encouragement that the statutory bodies concerned should borrow short overseas at high rates of interest to meet their losses at home, on the one hand, or their long-term capital spending on the other.
I ask my hon. Friend how much borrowing abroad has already been done by public bodies—by the nationalised industries and local authorities? What has been the increase in each of the past three years? How has this borrowing been divided between short-term and long-term commitments for repayment? Surely Clause 4 should at the very least state that Treasury approval will not include short-term borrowing for long-term spending.
Then there are the Treasury guarantees. How are they to be implemented? At what prices of sterling are they to become effective? Are we to continue the situation in which it is possible to find that for one part of the economy we have the floating pound and for another a floating pound guaranteed at fixed and higher levels? Which levels of sterling will apply to these debts if the guarantees are ever called upon to be effected? Could they be applied to exchange levels above the ordinary exchange rates for Sterling at the settlement dates?
Is it reasonable so to extend the powers of statutory corporations to borrow at a time when we have seen vast increases in world liquidity—much greater than any comparable increase in world trade—when liquidity, as the United Nations Statistical Year Book tells us, has grown by over 62 per cent. in the last two years alone, and when we know that at home we have been increasing our money supply at a rapid rate? At the same time, we find our own pound forced down against a stronger dollar and there is a large impending deficit on our balance of payments to be expected this year, following the bad past year.
All these threats are coming about—in spite of the low value of the pound, which should encourage our exports and, we hope, will increasingly do so ; in spite of the very high interest rates in the United Kingdom ; and in spite of the salutary and substantial cuts announced to reduce or postpone public spending in the year ahead.
12.45 a.m.
I cannot help but feel that the use of the words in question in the Bill is unfortunate in the light of all these factors, and even more particularly at a time when we have experienced secondary bank failures. I repeat the question which seems to me to be cardinal. Will the Treasury always ensure that the terms of borrowing are long enough?
If, however, the Treasury control is adequate, and if the Treasury ensures that the terms are long enough and the interest rates reasonable, why on earth does not the Treasury do all the borrowing? Why put the borrowing on to the statutory corporations, on to the nationalised industries? Either they are to be free agents to borrow under certain rules or, if the rules are to be drawn so


very tight, the Treasury should do it itself. In that case, what is the point of Clause 4?
I have no wish tonight to divide against the proposals of my hon. Friend the Minister of State, but I felt that, having sensed the misgiving of which I spoke earlier, I should make these points about the need for thrifty legislation which encourages sound borrowing. There is no objection to borrowing as long as it is absolutely safe. It has always been the height of folly, however, for any business undertaking to borrow short and lend long. I shall be obliged by my hon. Friend's reassurance that no Treasury permission will be given for such action.

Mr. Golding: The preceding contribution was important although it failed to take into account very many issues that the clause presents. The issue has been tackled so far, particularly by my hon. Friend the Member for Heywood and Royton (Mr. Joel Barnett), from the standpoint of its financial implications for the economy.
The Government can be accused over the last couple of years of using the nationalised industries as a method of backdoor borrowing from other countries. In this respect, of course, the arguments that have been presented are very important. It would have been more straightforward of the Government to have stated clearly and loudly what was being borrowed abroad by the nationalised industries.
The hon. Member for Hornchurch (Mr. Loveridge) asked for a statement of account. This has appeared. I asked the Minister to list the borrowings by the nationalised industries and others from international sources over the last two or three years. If the hon. Member cares to look it up, a full answer will be given to him.
I cannot see how, with the present reported massive balance of payments deficit, we can do anything else than borrow from abroad. Having got into the terrible mess that we are now in, if we are to avoid massive unemployment and a substantial reduction in the standard of living of our working people, I cannot see how we shall ever be able to do it without borrowing from abroad. It is then for the financial wizards to consider

methods by which this borrowing should be done. It may well be that it would be better for it to be done through the Treasury—although, because of arguments which are adduced at present, I wonder whether that is so. But whatever method is used, we have to accept that the present Government will go heavily into debt because of the balance of payments crisis which they themselves have created. That debt can be only international debt, and this is something we shall have to face.
The development of the crisis has put into perspective our arguments on this Bill on Second Reading and in Committee. This borrowing has to be done—and this is where I differ from my hon. Friend the Member for Heywood and Royton (Mr. Joel Barnett)—taking into account not only the interest of the economy but also the interests of the nationalised industries. My hon. Friend's contribution showed that he is, albeit a shadow Minster, very much a Treasury man. His arguments concentrate on issues of monetary management rather than on whether they take into account the interests of the nationalised industries.
We have not so far in this discussion mentioned Clause 4(1)(b) which says that the bodies corporate set out in the first column of Schedule 2 will be able to borrow money in sterling from the Commission of the European Communities and from the European Investment Bank. I should like the Minister to say something about the reason for this provision and why we should go to the Commission and to the European Investment Bank for loans in sterling. We see from Schedule 2 that the provision applies to the transport industry, the Railways Board, the Electricity Council, the British Gas Corporation, the Post Office, the British Airports Authority, the British Overseas Airways Corporation, the Civil Aviation Authority, the British Steel Corporation, the Covent Garden Market Authority and the Maplin Development Authority.
The answer must lie in the fact that there must be a European concern for the development of a European infrastructure—a feeling that it is important for the development of Europe that transport, the steel industry, the energy industry and the telecommunications industry should be developed. I believe this to be


a fundamental reason why the European Investment Bank should wish to lend money to develop projects essential to the infrastructure. I do not want the Government to deny the nationalised industries the right to go to those European bodies for funds. It could be one of the benefits of the Community that it opened up a fresh source of capital for our nationalised industries.
Our people see the very many disadvantages of belonging to the Community, and it would be very desirable if they were to see some tangible proof that membership of the Community was leading in some way to industrial development. That is why I say that Clause 4(1)(b) is very important and one about which the Minister should tell us. I should like to know what money has been borrowed already in sterling from the Commission and how much, if any, from this European Investment Bank.
I put my name to the amendment because I thought that it was the wish of my hon. Friends to probe the intentions of the Government in this connection. I said just now that I thought that my hon. Friend the Member for Heywood and Royton had spoken with a shadow Treasury brief. I speak as one who is interested in the welfare of the nationalised industries and, however much my hon. Friend may smile, I consider it very important to speak in their favour.

Clause 4 could be very much to the advantage of our nationalised industries. According to figures which I have from the Treasury, it is not true that under the Labour Government the Post Office borrowed substantial sums abroad for use in this country. I understand that the borrowing abroad which occurred was for the purpose of developing international overseas installations. However, in more recent times the Post Office decided to borrow substantial sums, and I tell my hon. Friend the Member for Heywood and Royton that that has been very much to the advantage of the Post Office. My hon. Friend shakes his head—

Mr. Joel Barnett: My hon. Friend must not misinterpret movements of my head. I agree with everything that he says.

Mr. Golding: I am glad to have that on the record. I have no doubt that it will be quoted to my hon. Friend after

the General Election. It was a pleasure to hear those words coming from him—

Mr. Barnett: I shall qualify them any minute now.

Mr. Golding: They could be of importance later.
It has been to the advantage of the Post Office to borrow abroad, for a number of reasons. One is that, before the cut, the Post Office was in difficulty in that it could not obtain the investment money that it wanted from the Treasury. The level of self-financing fell, the Treasury itself has had to raise the money that it was lending to the Post Office, either from taxation or from its own borrowing, and the pressures have been very heavy. Consequently the Post Office has been to Europe to borrow.
1.0 a.m.
It cannot be said that that was a bad thing. The rate at which the Post Office has borrowed is lower than it would have had to pay for borrowing direct from the Treasury. The source of not cheap, but cheaper money for telecommunications investment is Europe. That has been a great advantage to the Post Office, because, with our crippling rates, it has been paying almost £200 million in interest charges. It is important in those circumstances for any nationalised industry to be able to go to Europe and other money markets for cheaper capital. That is preferable to obtaining money on the open market, which the Treasury could not permit because of the element of private financing involved.
Following the hon. Member for Horn-church, may I ask the same question but in a different way? Is it true that the nationalised industries will go separately to Europe for funds, particularly from the European Commission and the European Investment Bank? The bank is prepared to finance particular infrastructure projects, whereas it will not lend willy-nilly to Governments in balance of payments difficulties or Treasuries short of money. Will it lend to administrations and corporations that want to finance projects which will strengthen the infrastructure and general health of the economy? That is an important question. If the Minister says, "Yes", it would not be appropriate for the Treasury to go to Europe to borrow money for itself.
Perhaps the Minister of State could reiterate the conditions on which the money is borrowed. The hon. Member for Hornchurch seemed to think that the money could be easily borrowed without Treasury sanction. It is apparent, as I said earlier, that the Treasury is always willing to apply the brake on progress, and I cannot believe that it will not meticulously scrutinise every application, giving permission to borrow only when it believes that to do so will be in the interests of the nationalised industry concerned and, as my hon. Friend the Member for Heywood and Royton might say, perhaps more importantly, in the interests of the economy as a whole.
Perhaps the Minister will be able to reassure us that the Treasury will look carefully at each application, although I should not like that to happen every time, because the Treasury is sometimes a barrier to progress. With its money mind, its accounting mind—and I say that without disrespect to my hon. Friend the Member for Heywood and Royton—the Treasury is often more interested in the commas than the productive potentials of a borrowing agreement.
On what terms would the nationalised industries borrow? I have heard it suggested that a fault in borrowing abroad is that the terms, periods and rates of interest are not the most advantageous. Perhaps the Minister will make that clear and will say what guarantees are included. Were the nationalised industries themselves to take the risk of the rate at which the British currency is being devalued, I should have serious reservations, but I understand that they are protected from the severest devaluations of the pound in world markets by the Treasury itself. I would like to hear the Minister speak on this subject tonight because, again I say, he might bring reassurance to those of us who have argued that the Government should not be persuaded away from going to Europe—going, indeed, to the world—to find funds for the development of nationalised industries. I cannot help but ask him how far the cuts in the investment programmes of the nationalised industries have made this course unnecessary.
I also ask him these questions. What were the fundamental reasons for deciding to go abroad to borrow money? Was it

that it was becoming difficult to finance the programmes of the nationalised industries from self-generated incomes? Was it becoming increasingly difficult to finance the nationalised industries from money borrowed by the Government from small savers? Was it because it was becoming increasingly difficult to get money by way of taxation to meet the rising cost of public expenditure, of which the capital expenditure programmes of the nationalised industries were only a part? Was it because of all these reasons? Was it because of the difficulties of balancing the books at home? Was it because the Government wanted to borrow by the back door from Europe? I know that many hon. Members would be pleased to hear an answer to that question.
If the answer is not that the Government were sneaking off to borrow when the electorate were not watching but that they were trying to avoid further taxation, and trying to find other ways to finance the nationalised industries' programmes, other than by raising money from the British public, then I repeat my hon. Friend's question: now that the nationalised industries' programmes have been slashed, will it still be necessary to go to Europe to borrow money?
These are the questions I want answered tonight. I hope that we shall have satisfactory answers, because this is a very important part of the Bill, to which we shall have to return on Third Reading if we do not have satisfactory answers now on the amendment. I assume that my hon. Friend will not press the amendment to a Division. I assume that it is only a probing amendment. However that may be, it is still very important that the Minister gives us straight answers to the questions which have been put to him from these benches.

1.15 a.m.

Mr. Bruce-Gardyne: I am sure that we shall all wait with bated breath to hear the reply of my hon. Friend the Minister of State to the detailed questions which the hon. Member for Newcastle-under-Lyme (Mr. Golding) addressed to him—all two of them, if I counted right. I hope that the hon. Gentleman will forgive me if I move on to slightly different territory, namely, the rather narrower context of the amendment which we are discussing.
I am very glad that Mr. Speaker has enabled us to return to the question of Clause 4 on Report, because, for reasons which we need not go into here, it is fair to say that my hon. Friend gave us a somewhat encapsulated reply to our debate on these matters in Committee, and the House would benefit from some further elucidation on one or two points before we leave this very important clause tonight.
In Committee it seemed to me that my hon. Friend broadly advanced four arguments in support of the proposition that the nationalised industries and local authorities should be encouraged—because, as the hon. Gentleman rightly said, the purpose of the clause is not simply to permit ; it is to encourage local authorities and nationalised industries to borrow in the currency markets overseas.
The first argument was the point of view that this clause only extends the authority which most of these bodies already enjoy to cover those which do not enjoy that authority at present. One accepts this, but I do not think that my hon. Friend will complain at my suggestion that we consider at the same time the whole strategy of encouraging borrowing abroad by the public sector in this manner at this point.
The second point my hon. Friend advanced in Committee seemed to me then and seems to me today rather more questionable. It was that there was no good reason why the local authorities and nationalised industries—the local authorities in particular—should not be encouraged to go out and raise their financial requrements in the Eurocurrency markets, for example, if they could do so more cheaply than they could do at home. I can see very good reasons why they should not be encouraged to do so at present, because in principle I thought that it was our objective that the local authorities should be dissuaded from excessive and sumptuary expenditure at present.
My hon. Friend frowns, but my right hon. Friend the previous Chief Secretary spoke in no uncertain terms to the local authorities about the Government's determination that they observe a certain amount of restraint in their spending programmes. I cannot see that it is exactly helping to observe restraint in local authorities' spending programmes to

encourage them to borrow money more cheaply than they would have to pay for it at home. Therefore, I am not sure that that argument entirely stands up at present.
The third proposition my hon. Friend advanced was the one which the hon. Gentleman touched on about the fact that there was nothing immoral about borrowing overseas. As it happens, broadly speaking I agree with my hon. Friend and with the hon. Gentleman on this point. I think that it was a fair point which my hon. Friend made in Committee when he perhaps dissociated himself from many of those—I do not think I would include myself among them—on what was then that side of the House who criticised the previous Government for going to the international pawnbrokers. I think that there was a certain amount of exaggeration in that argument, and I should not necessarily dissent from the proposition to that effect which my hon. Friend advanced in Committee. But it is clear—I do not think that the hon. Member for Heywood and Royton (Mr. Joel Barnett would dispute it—that this can be only a temporary phenomenon and it does not eliminate the long-term need to correct the reasons why the overseas borrowing has arisen in the first place.
There is, however, one point on which one might encourage my hon. Friend the Minister of State to comment. Notwithstanding what he said about the way in which this borrowing was to offset the capital outflow, the general impression that has been created is that the borrowing, recalling what my right hon. Friend the then Chief Secretary said on Second Reading, was required to finance a balance of payments deficit which was acceptable as part of the basis of our growth strategy.
The trouble here is that the growth strategy is not what it was. I say no more about that, but since the growth strategy—to the relief of some of us, I confess—has been a bit demoted, should we not ask whether the raison d'être which led to the desirability of the borrowing in the first place has not also more or less disappeared with it?
The fourth argument which my hon. Friend advanced was that there was no need to worry about the scale of the borrowing which had already taken place and was likely to take place in future


under Clause 4 because the main burden of capital repayments would not occur until we had the riches from the North Sea. I sometimes feel that we are counting our blessings from the North Sea with rather excessive enthusiasm and haste. I hope that in this respect we have done our sums aright.
However, if I may say so, I do not think that my hon. Friend, in advancing those four propositions in Committee, entirely answered some of the other questions which were raised on this clause. He was asked by the hon. Member for Heywood and Royton, and by me, I think, but was unable to give a clear answer, what was the additional burden of servicing charges which we were incurring by financing the deficit through local authority and nationalised industry borrowing as opposed to that which we should have incurred if we had exercised our rights with the International Monetary Fund. I wonder whether he can elaborate on that tonight.
Before we leave the clause, we should be clear on the justification for using local authorities and nationalised industries rather than exercising our rights with the IMF. I realise that the attraction of using Glasgow Corporation or the Central Electricity Generating Board to finance the balance of payments deficits is that they do not incur the visitations of Mr. Richard Goode or his successors. I have seen the comment recently in the newspapers—it seems to be fashionable now ; one finds it in the Economist, and nothing could be more fashionable than that—that it was untrue to suggest that the visitations of Mr. Goode or his successors induced Governments, let alone a Government such as our own, to pursue policies which they would not otherwise have intended to pursue. I wonder a bit about that when I contemplate the impact which the visitations of Mr. Goode appeared to have on the course of policy under a Labour Government.
In consequence I wonder whether, if we had been receiving such visitations because we had chosen to finance the balance of payments deficit by exercising our drawing rights with the fund rather than through the local authorities and the nationalised industries, we should have continued to indulge in a growth in the money supply varying between 20 per

cent, and 30 per cent. over the last two years and whether we should have had a net borrowing requirement of £4,500 million this year.
That draws me to the suspicion that we might not have been experiencing the current rate of inflation if we had chosen to invoke our borrowing rights at the IMF and if we had accepted consequential drawings. I do not know, but that seems to me a not impossible proposition. However, we need to know how much further we are to go along that road. The first point in that respect is how much overseas borrowing has already been incurred by the local authorities and nationalised industries. I was interested to see that whereas my hon. Friend the Minister of State told me before Christmas that the average burden of interest payments incurred over the next five years would amount to around 200 million dollars a year, in an answer given since the House resumed that figure had gone up to 270 million dollars for the current year, which would seem to indicate that the burden of interest rates was already escalating at a fairly horrific rate.
Reference has been made to the comment of my right hon. Friend the Paymaster General who pointed out that my right hon. Friend the Chancellor had made it clear some months ago that he might, if necessary, approach the International Monetary Fund. We have all read with interest the reports of the meeting of the Committee of 20 in Rome last week. It might have been constructive if we had had a statement today about the course of that meeting because it had some fairly far-reaching implications and, possibly, repercussions. That apart, however, it was reported in the Press over the weekend that during the course of this meeting discussion had been initiated about the possibility of the United Kingdom activating the first tranche of our borrowing entitlements to the IMF amounting to approximately 800 million dollars.
Against the background of the latest trade returns such a borrowing might be a little reminiscent of Mr. Micawber going round trying to importune his friends for a flybutton. One would not have thought that 800 million dollars would have made a very big impact, but it would be interesting to know


whether my hon. Friend can shed any light on the extent to which such reports are based on fact and whether he can shed any light on the Government's intentions regarding future borrowing from the IMF rather than further reliance on the borrowing capacity of the nationalised industries and the local authorities.
I notice, on re-reading the speech of the hon. Member for Heywood and Roy-ton in Committee, that he complained about the manner in which we were liable to get locked in to a parity situation because of the obligations we had incurred from exchange rate guarantees on borrowings that had already been carried out. I must confess that I would not necessarily regard that as an unmitigated disaster. I have always been highly sceptical about the virtues of floating. My scepticism has in no way diminished because of what has happened in recent weeks.
We would be very much better advised, rather than continuing to try to dirty the float, as it were, to use the borrowing powers of the nationalised industries and the local authorities to fix the rate, to seek international support from the IMF and from the other Governmental sources of supply of overseas borrowing, and to accept the strings which would undoubtedly be entailed therewith.

1.30 a.m.

Mr. Nott: I must explain to my hon. Friend the Member for Horn-church (Mr. Loveridge) that the powers that are granted in this part of the Bill do not represent in any way a new policy. Nationalised industries first began to acquire foreign currency borrowing powers in the 1960s under the then Labour Government. The air corporations were the first. The others followed as opportunities for legislation arose. The Bill merely completes the process so that all the nationalised industries and public corporations will be in a position to take advantage of opportunities which might be available.
Powers are given in the Bill to those industries which do not already have them. The opportunity has also been taken to remove an anomaly in the existing powers of the electricity authorities and the Co vent Garden Market Authority. I must tell my hon. Friend the

Member for Hornchurch that we are not embarking on any new policy.
I should explain to the hon. Member for Newcastle-under-Lyme (Mr. Golding) that within the framework of the borrowing programme, and having regard to the substantial sums that have been raised so far, I am confident that the terms which have been obtained are in general very satisfactory. The majority of public sector borrowers have received an exchange rate guarantee and, therefore, they bear no exchange risk. I can assure the hon. Gentleman, he having asked about the scrutiny which the Treasury gives to each of the loans, that each loan is considered separately and that its terms are studied to ensure that it is in the national interest, and in the interests of the public sector authority itself, to borrow overseas in the manner proposed.
My hon. Friend the Member for Hornchurch asked how much we had so far borrowed abroad. In 1973 the public sector borrowed to the extent of 2,495 million dollars. The resulting inflow of funds was sufficient to finance approximately three-quarters of the current account deficit estimate for 1973 as a whole. When interest rates abroad are competitive with sterling, and when we need in any event to finance a payments gap, I have always believed this system to make considerable sense.
Moreover, it should be remembered that this country normally exports more structural capital than it imports, largely in respect of export credit, aid and other forms of overseas investment. Therefore, the fact of my stressing in Committee primarily the structural capital account and my right hon. Friend the previous Chief Secretary's stressing on Second Reading primarily the current account deficit was of no great significance.
The fact is that as a result of this policy we had an inflow of 2,495 million dollars, which was of great benefit to our balance of payments. In Committee I referred to the reasons of my right hon. Friend the then Chief Secretary, saying that
it makes sense to borrow foreign currency in this way in order to increase the resources available to help finance our balance of payments deficit on current account."—[OFFICIAL REPORT, Standing Committee F, 20th December 1973 ; c. 178.]
I was referring to both the structural capital account and the current account.
Of course, overseas borrowing involves an exchange risk. But whether there is a loss of real resources for the country is an entirely different matter. We may be obtaining capital at a lower real cost than would otherwise be the case.
My hon. Friend was worried about borrowing short and lending long. It is an understandable matter of concern, but I can assure him that we have not allowed any public sector borrowing for terms of less than five years up to now. I pointed out in Committee that the repayments of principal arrive towards the end of the decade and early in the 1980s. Over the period ahead we can expect the underlying balance of payments to improve as the measures taken by the Government and the competitive value of sterling become reflected in our trading flows. By then we shall be benefiting from North Sea oil.
The recent oil price increases will tend to mask changes elsewhere in the balance of payments, but the oil price problem affects all oil-consuming countries, and will need international arrangements to handle it.
The extent of our overseas borrowing is not, in the Government's view, such as to cause any serious worry about the repayments schedule, which is reasonably well spread over the late 1970s and early 1980s. The hon. Member for Heywood and Royton (Mr. Joel Barnett) looks unhappy about that, but it was a point of great concern to my hon. Friend.

Mr. Joel Barnett: I was only recalling that I had asked about the other loans which will come later and which will have to be repaid at the same time.

Mr. Nott: I will come to that in a moment.
As I said in Committee my right hon. Friend the Chancellor has stressed that our reserves are strong and that if the circumstances required it he would not hesitate to have recourse to the IMF or other facilities.
My hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) asked a number of questions about the relative costs of borrowing in Eurodollars in the way we are now doing and borrowing from the IMF. It is difficult to specify precisely the interest cost of the public sector loans, because a little less than half of

the total amount is represented by the Electricity Council loan, which is on a floating basis, geared to the inter-bank rate, and the interest rate charge on the balance of payments will vary with interest rates generally. At present our interest payments amount to over 200 million dollars a year, and a little under half that amount is at a floating rate. Our invisible surplus is now running at 2,000 million dollars a year, so there is a substantial difference between the interest payments and our invisible account surplus.
Capital account repayments at the moment show maximum repayment by 1980 of 670 million dollars. These are figures which I set out in an answer to my hon. Friend the Member for South Angus on 28th November 1973. I would be happy to bring that repayment schedule up to date as we go along if my hon. Friend would table further Questions. None of these figures is of an order which need cause us concern so long as the balance of payments develops as we expect and which Government policies are designed to achieve.
These loans bear a higher rate of interest than that which would be paid by central Government on drawings by the International Monetary Fund. One could take 10 per cent. as being roughly the cost of borrowing in Eurodollars. Borrowings from the International Monetary Fund would be considerably less, but to base this amendment, which I realise is a probing amendment, on that is to ignore completely one of the beneficial effects of these loans.
If the amendment were to be carried, the nationalised industries and other authorities mentioned in the Bill would not be able to take advantage of the lower interest rates payable on Eurocurrency loans. They would have to pay domestic rates on all borrowings at a time when sterling rates are unusually high. The saving to public sector borrowers who go by this route and borrow overseas is now about 1 per cent. per annum and, given the size of the borrowing, this is not negligible.
I must make it clear to my hon. Friend the Member for South Angus that because a local authority borrows abroad that does not in any way increase the total of local authority borrowing. I think


he was implying that it was strange that at a time when we are going into a more rigorous period of capital expenditure—he was referring to the announcement of my right hon. Friend the Chancellor on 17th December—we should continue to allow overseas borrowing by the public sector. But capital expenditure by local authorities requires loan sanction and the capital expenditure of the nationalised industries is controlled by the Government. This does not increase the total of borrowing by the public sector.
The hon. Member for Newcastle-under-Lyme said that he thought this was probably something to do with the fact that the Government could not borrow what they needed within the United Kingdom. A Government, by its very nature, can always borrow. What it cannot do is always to borrow in a way which is not inflationary in its consequences. Overseas and domestic borrowing have precisely the same effect on the money supply either way. If a local authority borrows abroad, the equivalent amount of sterling has to be purchased in the United Kingdom and therefore the money supply is unaffected either way.
There is no question but that a Government can always borrow. The question is what it can borrow without inflationary consequences for the economy. The question whether the public sector borrowers at home or overseas does not have any effect on the money supply. Whether the public sector borrows overseas or within the United Kingdom does not affect the money supply in either case.
1.45 a.m.
I was asked about the subsection dealing with borrowing from Community institutions. The reason for it is that the European Investment Bank, in particular, normally lends in a package of currencies which include sterling. Therefore, we needed to insert the clause in the Bill to ensure that project borrowing in the United Kingdom which might be suitable for loans from the European Investment Bank was not inhibited thereby. There have, I think, been two borrowings from the European Investment Bank—one for the British Steel Corporation, and, subject to my memory,

one for the Industrial, Commercial and Finance Corporation.

Mr. Bruce-Gardyne: Can my hon. Friend shed any light on the news we have had of the discussions in the Committee of 20 about possible activation of our borrowing rights with the fund?

Mr. Nott: I cannot go beyond what my right hon. Friend the Chancellor has said. He has made it clear that if we need to look elsewhere for additional borrowing facilities overseas, and if the circumstances require it, he will not hesitate to do that.

Mr. Golding: I asked whether the investment fund would loan to Treasuries or whether the loans would be for specific projects. It has been asked whether it would be better for the Treasury to borrow all the money from abroad rather than that the nationalised industries should go separately to Europe or elsewhere for funds.

Mr. Nott: The European Investment Bank was set up primarily to lend for projects such as the Teesside project, where it made a loan for the British Steel Corporation. As part of the arrangements under the Treaty of Accession, we have subscribed to the capital of the bank, but its principal purpose is to make loans on projects and for regional development and structural and other purposes.
The public sector borrowing programme remains part of our general balance of payments strategy. The borrowing needs to be regulated if it is not to have possible adverse effects on credit ratings and on availability. That is why we are not allowing every local authority to borrow. We have had to set a limit on the size of local authority which can borrow by this means abroad, but generally we expect that borrowing in the current year will be more or less the same as in the past year. We intend this policy to continue because of the considerable benefit which it is bringing to the financing of our balance of payments.

Mr. Joel Barnett: I was interested to hear from the Minister that the invisible account now exceeds the interest which we would be paying on these loans. However, I always thought that we were


using the invisible account to reduce the deficit on the visible account. I should like the invisible account to be used twice, but I doubt whether that is possible.
This has been an interesting debate and will have been helpful to hon. Members. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

1.50 a.m.

Mr. Nott: I beg to move, That the Bill be now read the Third time.
I am sure that hon. Members would not wish me at this late hour to outline in detail again the main purposes of the Bill. Its main purpose is to authorise the payment of compensation to certain nationalised undertakings for the deficits they have incurred or are incurring as a result of price restraint policy and to widen slightly the borrowing power of a few of the public corporations, in most respects to bring them into line with the powers already exercised by the majority.
If there are any extremely pressing and urgent matters which hon. Members wish to raise, perhaps I may, with leave, reply to them later.

1.51 p.m.

Mr. Golding: That contribution hardly did justice to the importance of the Bill that is before the House tonight. It is an oddity that during the Second Reading there was little interest in the Bill, and a poor attendance. Tonight it has been taken as the second debate of the day. This is very odd, when one looks at the sums involved, because one sees that the Bill provides for £145 million in respect of losses in 1970–71, 1971–72 and 1972–73. For 1973–74 and 1974–75 we are talking of total payments which may not exceed £400 million or, by Treasury order, a maximum of £500 million.
They are very substantial amounts, and are worthy of discussion. [Interruption.] The hon. Member says, "Not now". If that is the attitude of those on the Government benches, the Government Whip should not have moved the Third Reading tonight ; he should have moved it tomorrow or the day after, or on some subsequent occasion.
The Bill is an important one, because it provides for—in some cases without

redistribution—an income which is undesirable. In respect of 1970–71, 1971–72 and 1972–73 the Bill provides compensation of nearly £146 million to meet the deficits of the nationalised industries. Some of us believe that if the nationalised industries are to be compensated at all they should not only have compensation for the losses recorded but there should be some element, however difficult to define, of compensation for the profit that they did not earn.
I said that the Bill redistributed income, and so it does. As I understand it, the sum of £146 million is to come from moneys provided by Parliament—which is a euphemism for taxation. The money will come not from Parliament but from the people. The money will come from general taxation. Therefore, it is not a case, as it would be in private industry, of the people having avoided paying amounts from their pockets. They will pay, whether they pay for the services of the nationalised industries or their products or later through taxation for compensation payments. Thus we are not talking about improving the lot of ordinary people through this measure.
There are services which are to be compensated for from sums obtained by Parliament from working people. Some services have been, and will be, provided at a lower cost to people who could well afford to pay for them. The basic objection to Clause 1, with Schedule 1, is that it provides for the subsidising of groups and individuals who require no subsidy. Clause 1 and Schedule 1 contain a policy which is undesirable in itself. If these compensation payments are being paid to the nationalised industries on this scale, this money—nearly £146 million—will not be available for other projects.
On Second Reading I made the point, which I reiterate, that I could see no logic in the payment of compensation to a telecommunications service which could be very profitable and which could expand easily on its own account. I cannot see why we should, in effect, pay subsidies to those who use telephones in their inessential businesses when we refuse absolutely to subsidise many food products. I cannot see why we should pay this £146 million at all. It would have been better for the nationalised industries


to pursue a pricing policy which was on all fours with private industry.
Many of us believe that the nationalised industries have been discriminated against in two ways. First, the formal codes have discriminated against them. Secondly, however, many of us believe that there has been arm-twisting of those who take the decisions in nationalised industries. We believe that the amendments raised by price increases in the nationalised industries have been less than the code permits. Because of this those industries have suffered severely.

Clause 2 will perpetuate the difficulties. I dealt earlier with the difficulties caused by cuts in capital expenditure. The same point can be made about the provision for compensation of £400 million for 1973–74 and 1974–75. By passing this Bill we are saying that these policies will continue until the end of 1975. I emphasise the point that restriction of price increases in the nationalised industries has had important repercussions, particularly in terms of investment.

On Second Reading I said that because the nationalised industries will be unable to raise sufficient capital, they will have to borrow from the Treasury or from Europe at highly inflated rates of interest. They will incur costs which otherwise they would not have incurred. But the overriding objection to the policies in Clauses 1 and 2 is that they will lead to a lowering of morale among management and men in the nationalised industries. When losses are made and compensation is paid, outside critics claim that this illustrates the inefficiency of the nationalised industries. They do not draw the obvious conclusion that the deficits can be directly attributable to Government policies. It is argued that these are not compensations payments but are subsidies to the nationalised industries. I believe this to be bad for the nationalised industries. It can lead only to a lowering of morale, accompanied by a drop in productivity.

The Treasury's attitude has been to look at the interests of the economy first with the nationalised industries somehow or other having to accommodate themselves to the wellbeing of the economy. The future health of the economy depends upon the present health of the nationalised

industries. Without coal, steel, communications and transport there can be no successful British economy. By damaging that large sector of the nationalised industries, Britain's competitive base for the late 1970s and the early 1980s will be undermined.

By their present policy the Government are preparing the ground for great economic difficulties later on. It would be far better for the Government to try to reach a steadier policy in respect of the nationalised industries. It would be better not to penalise those industries so severely in terms of their revenues. It would be beneficial not to put them into a situation where they lose all the targets that they had previously for managerial efficiency.

I was pleased to hear the Minister confirm, with one exception, my arguments in favour of borrowing from Europe. It is important that we use the investment bank when it is willing to support British projects. It is important to borrow abroad when it is possible to get for the nationalised industries cheaper finance than can be obtained at home. I was pleased to hear that the nationalised industries would not have to accept the exchange risk in these circumstances.

This Bill should never have been necessary. The Opposition are forced to support it because the deficits have been created and the compensation is worth while and because the losses will be there in 1973–74. But it would be undesirable for a Labour Government to pursue the policies of this Government. It is bad at any time to kill the goose that lays the golden eggs. The nationalised industries do not lay golden eggs, but they provide the basic services and products which are essential to this country's prosperity. The sadness of the Government's policy is that they have discriminated against the public sector to the extent that we shall lose the potential for production and productivity in the 1970's and 1980's. The quicker this Bill is reversed the better.

2.10 a.m.

Mr. Bruce-Gardyne: I am in broad agreement with several of the points made by the hon. Member for Newcastle-under-Lyme (Mr. Golding), and I hope they lost nothing by reiteration.
I said on Second Reading that this was a bastard Bill and its parentage has not become more attractive as we have learned more about it. This is one of the numerous consequences of the foolish attempt to try to control inflation by passing laws against it. So long as we indulge in that folly, we shall be faced with Bills like this. It will not be the last unless and until we abandon the attempt the deficiencies of which we so roundly exposed for many years. Every word we said then has been borne out in the event.
I hope that my right hon. and hon. Friends took careful note of the Report of the Select Committee on Nationalised Industries. In paragraph 108, it said:
To sum up, your Committee believe that the evidence which has been presented to them shows that, in the last five years, the impetus towards a more rational control of the nationalised industries has tended to decrease.
That is a grave charge to be levied against those responsible for public supervision of these industries. It is not an unfair judgment of the consequences of statutory control of prices and incomes and (he attempts to manipulate the price system which preceded them and of which the Bill is the consequence.
In paragraph 111, it said:
Your Committee believe that the Government should make an early statement setting out the steps which they propose to take to restore the industries to profitability.
I hope that the Government will act on that proposal, not least because it will be impossible to do so as long as they pursue the follies of a statutory control of prices and incomes.

2.13 a.m.

Mr. Joel Barnett: The shadow Treasury Bench has noted all that has been said by my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding). We are aware of all that has been done to the nationalised industries over the years, and when the positions are reversed in the near future the treatment of these industries and of the economy will be very different.
The Bill, like other aspects of Government policy, is left even at this late hour very confused. The Minister of State expressed a pious hope when he talked of getting back to commercial targets or a favourable balance of payments

in the near future. I hope that he is right, but I fear not, at least in the near future.
We support the idea of subsidies, given the level of inflation. We recognise the need for borrowing, given the balance of payments deficit. In those circumstances, we do not propose to divide against the Bill.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Orders of the Day — SEA FISHERIES

2.15 a.m.

The Minister of State for Agriculture, Fisheries and Food (Mr. Anthony Stodart): I beg to move,
That the Sea Fish Industry Act 1970 (Relaxation of Time Limits) Order 1973, a copy of which was laid before this House on 19th December, be approved.
It may also be convenient if with this motion we discuss the next—
That the Fishing Vessels (Acquisition and Improvement) (Grants) (Amendment) Scheme 1973, a copy of which was laid before this House on 19th December, be approved.
I shall be very brief in asking the House to approve these two motions, which will put us, in 1974, in exactly the same position as has obtained throughout 1973.
The motion amending the grant scheme means that approvals given by the White Fish Authority or the Herring Industry Board for vessels or for improvements will continue to attract the same rate of grant as before, that is, 30 per cent. for vessels under 80 ft. in length and 25 per cent. for longer vessels. Vessels under 80 ft. may also be the subject of loans, and that is one of the reasons for the order which relaxes time limits. It will allow my right hon. Friends to continue for another year to put the authority and the board in funds to make such loans. The other reason for the time limits order is to allow us to go on grant-aiding approved projects in the current research and development programmes of the authority and the board, which is clearly right.
There is no more to these two motions than that, but there are two related matters that I should briefly mention. One is, as I told the House on 13th December in reply to my hon. Friend the Member


for Haltemprice (Mr. Wall), that we have had to interrupt the issue of new grant and loan provision for the present, except for improvements essentially directed to the safety of the vessel or crew. I explained then that this was a temporary step and I repeat that as soon as acceptable arrangements can be worked out in consultation with the industry and the statutory bodies, it is our intention that the powers that I am asking the House tonight to continue for the whole of 1974 will again be available.
We shall of course have to be quite sure what we are doing when approvals restart, for there are sizeable amounts of public money involved, particularly for new vessels, financed by the White Fish Authority. During 1972–73, the authority approved 165 applications for new vessels and committed about £4½ million in grants and £2½ million in loans. Since the start of the current financial year the number of new vessel applications under consideration has almost doubled, and we are still looking into what this implies for further expenditure. I am sorry, therefore, not to be able tonight to give the date for resuming approvals, but I shall be in touch with the industry, which I intend to consult about future arrangements as soon as we usefully can.
The other point that I should like to mention, if only to avoid misunderstanding, is that the subject of what might happen further ahead if current EEC proposals are adopted is a separate issue. There is a Commission proposal, of which discussion has only just begun, to impose a common ceiling on aids given by member States from their own national resources for vessel building and for other purposes. As the proposal stands, there can be varied ceilings between 15 and 30 per cent. and because they are ceilings, individual member States would be able to give anything or nothing within them.
We shall be discussing this proposal with our industry, whose views my right hon. Friends will want to take into account before they take a decision, and it will also in due course no doubt come before the European Parliament. I cannot forecast when or at what level any Community ceiling on aids might become effective, or what might at that time be thought appropriate within that ceiling, but, as I have said, this is an altogether separate issue from continuing for 1974

the arrangements that we already have, which is what I am asking the House to do by approving these two motions.

2.20 a.m.

Mr. James Johnson: I must thank the Minister for his short speech at this hour of the morning. He has managed to convey an enormous amount of matter to us. Although he has great stamina I think I should not test it long at this time because it is in a sense a little unfair to force a debate upon him now. It is not a fiction to have a debate on the two statutory instruments, but in a sense it is a façade, because, looking at their text, one sees that all that has happened, compared with what happened last year is that a number has been altered. We have now a "4" instead of a "3"—1974 instead of 1973. That was the year in which the cascade of applications came in.
The Minister has a question to answer about the moratorium he mentioned on 13th December. He is in a position rather like Alice's, because he is walking at a standstill. He mentioned the EEC and its grants and loans. We have a familiar device at the EEC whereby the clock stands still. In this case it is the other way round now, is it not? We have moved the clock forward to 1974 for applications. There is no money being spent except the money which, I take it, has been voted or allocated for those orders which came in before 13th December—that cascade. I take it we are having this standstill because we had so many orders and so much money in the pipeline that the Minister's Department just could not handle them. So that finances, I take it, at the moment are at a standstill. No one will get any money unless and until the moratorium ends some time in 1974. I think that is the position. The Minister will, perhaps, confirm this.
As the right hon. Gentleman well knows, there is anxiety. I was reading a speech made by the Editor of Fishing News in December at Torquay, when he said that
the Government added that it was to suspend this- aid for an indefinite time"—
we have heard that tonight—
because there had been too many applications and it was costing too much money.


I hope that we shall be told fairly soon that the moratorium will end, because it may be that we have this standstill because the Government or the Chancellor got into some financial difficulty. We were tight for money in the autumn of last year.
One word about the 16 per cent. to 18 per cent. which the EEC nations—the Germans, the Dutch, and so on—give to their vessel owners when they build a new ship in, say, Cuxhaven. What is to happen in December 1974 before we move into 1975, when we shall, I understand, share with the Germans and others this lower figure? The Minister said, I think, that we would be allowed to do as we liked ; we could make our own arrangements here. Is it fair to assume that we may stay at 30 per cent. in 1975? If each State may maintain its domestic tariff, so to speak, we can stay at 30 per cent. This would greatly help, and it would allay the fears of many fishermen, inshore and others.
Lastly I would like the Minister to comment on the finances of the industry itself. There are some people who question the need for help of this nature. The Minister well knows that. Sometimes my London colleagues quiz me jocularly, asking why on the Hull fish dock fish is costing 75p a pound and boats such as the "Somerset Maugham" and "CS. Forester" are coming in with catches worth over £60,000. They allege that people are making fortunes, despite the fact that Governments of both political complexions have given them this aid. I know, the White Fish Authority knows, and the Minister knows, to almost a penny, what are the finances of the firms that go fishing in the North-East Atlantic.
I know the difficulties of some Hull firms with their cash flows. They may have five vessels in dock eating off their heads like horses and costing, perhaps £2,000 a day but not getting any fish, whereas the public see 75p a pound as the price for fish and £60,000 worth of fish coming into the auctions. It would be much better for the Government, in giving this aid, and for those in the House who talk about it, if much more were known by the public about the industry's finances, if books were disclosed much more openly and we knew exactly

what was happening. This would be healthier for the whole industry and would make for better relations between vessel owners, the unions and the public.

2.27 a.m.

Mr. Patrick Wolrige-Gordon: I congratulate my right hon. Friend the Minister of State on these Statutory Instruments. I was interested in the figures he gave about the mortorium. Will my hon. Friend the Under-Secretary of State for Home Affairs and Agriculture, Scottish Office confirm, in replying, that these discussions have started and that there will be an indication fairly soon of the time when the mortorium will end?
Can we expect a continuation of present policy if the harmonisation of State aids within the EEC takes a considerable time to achieve?
There is much discussion about the initial deposit of 10 per cent. Ten per cent. used to be a reasonable figure when the price of fishing boats was not the enormous capital cost that it now is, but 10 per cent. of between £120,000 and £160,000 is a large sum for share fishermen in my constituency, anyway, to find, especially when the money can be left lying out for anything up to two or three years because of delays in deliveries. Will my right hon. Friend reconsider the matter of the initial deposit?
At present, boat owners must pay their full contribution before any Government money is committed. Again, there is discussion about this. What is the objection to matching the contribution by the fishermen as it goes in to pay for the boats?
Unfortunate developments in one or two areas in recent months have resulted in a number of fishing boats and fishermen being left stranded with boats sometimes half built, sometimes with only the keel laid, sometimes with just the initial deposit paid. Are the Government considering any help for fishermen who have lost considerable sums as a result of this? Will they consider paying grants when money has been lost?
Are the Government satisfied that sufficient care is being taken over placing yards on the Government approved lists of builders? Fishermen spend almost all the time out, in very difficult circumstances, plying their trade and catching


fish. If the yards entrusted with building their boats acquire the stamp of respectability by getting on the Government approved list, there is a temptation to be inclined not to investigate standards at that yard much further ; and I would not blame the Government for that.
There seems to be some confusion about the three-day week, and I should greatly value my hon. Friend's assistance. Yards which are doing repairs are, I understand, exempt, whereas yards which are producing new vessels and not doing repairs have to observe the three-day week. Plainly, this is an anomaly, for these yards are producing vessels for the catching of fish, which is an essential part of our food production. I hope that the Minister can help on that.

2.30 a.m.

The Under-Secretary of State for Home Affairs and Agriculture, Scottish Office (Mr. Alick Buchanan-Smith): I thank the hon. Member for Kingston upon Hull, West (Mr. James Johnson) and my hon. Friend the Member for Aberdeenshire, East (Mr. Wolrige-Gordon) for the welcome they have given to the scheme, which, as we all recognise, is of great importance and interest to the fishing industry.
The hon. Member for Kingston upon Hull, West asked about the finances available under the scheme, with particular reference to the moratorium. The moratorium applies only to new applications. As my right hon. Friend said, the number of applications increased vastly in the course of last year. The moratorium is on applications which have not been approved at the date on which it was announced. This does not affect the payment of money on applications which have already been approved.
The moratorium does not affect the processing of applications which were outstanding at that date. Such applications can still be processed, with marine surveys and preliminary work done, so that when the moratorium comes to an end those who have put in applications will not have them delayed on account of lack of processing. I hope that that gives some reassurance.
I cannot give an assurance tonight on the date for the end of the moratorium. The White Fish Authority and the

Herring Industry Board are discussing this in co-operation with the fishing industry. The consultations have started, and we hope that they will come to a conclusion as soon as possible. A practical point to be made here is that, while certain people who have applications in find the moratorium a nuisance and an annoyance, one must at the same time recognise the tremendous pressure and congestion in many yards. This does not apply in every case—sometimes a berth is available—but it is worth remembering that the yards themselves are operating under great congestion because of the great increase in orders. I should emphasise also that the moratorium does not apply to improvements in the safety of vessels.
The hon. Gentleman asked also about the EEC. My right hon. Friend pointed out that the proposal from the Commission—that is all it is at the moment, and one should not treat it as anything more—is that there could be various ceilings between 15 per cent. and 30 per cent. That is the range. Since there are ceilings, individual member States would be able to give anything or nothing within them. But, as I say, these are only proposals, and one should not put any more emphasis on them at this stage than that.
Finally, the hon. Gentleman commented on the relative prosperity of the fishing industry. I use the word "relative" advisedly, because the industry has gone through some very difficult years and has had to face many financial problems. It is enjoying a period of greater prosperity at the moment. I agree that the more the public can be told about the precise financing of the industry the more helpful it is. The firms about which the hon. Member for Kingston upon Hull, West is concerned are public companies and that is a point which some of them will take into account in disclosing precisely where they stand financially.

Mr. James Johnson: Is the Minister saying that we need not expect to go into the EEC scheme with a ceiling of 16 per cent., 18 per cent., 30 per cent., or whatever it may be at the beginning of 1975? I understood that we were going into some EEC set-up in that year. Am I mistaken?

Mr. Buchanan-Smith: Eventually we shall go into such a scheme, but at the moment we are concerned only with a proposal which must be looked at. Until there is agreement we cannot say on what date the scheme will come into effect.
My hon. Friend the Member for Aberdeenshire, East asked what would happen to our grants scheme if the EEC policy was not formulated by the time the scheme ran out. Our scheme is designed to run for one year and if no EEC proposals are agreed by the end of 1974 we shall have to consider our position. The Act which enables the scheme to be made contains no time limit, so the power exists for us to take action.
My hon. Friend asked for confirmation about the number of applications affected by the moratorium. As at April 1973, the end of the financial year for the White Fish Authority and the Herring Industry Board, 69 applications were on the table. By the time of the moratorium in early December the number on the table was 126. That indicates the degree of increase. My hon. Friend asked about the 10 per cent. deposit and the burdens on the industry resulting from the applicant's having to put up the money as the building progressed. These are conditions of the scheme which have not been forcefully represented to us as presenting difficulties. I should like to discuss this with the authority and the board to see what element of difficulty they present, although we are not aware of them causing particular problems.
My hon. Friend asked about the problems of yards which have run into difficulties and the trouble this causes for the owner who is having a boat built. He has raised this before in correspondence, and I understand that he has taken the matter up with the Department of Trade and Industry, which is responsible for the shipbuilding aspect of the matter. I have suggested to him the question of performance bonds, which is a perfectly proper commercial procedure between two parties. If this is a problem it must be considered in a proper commercial context.
My hon. Friend also asked me about yards on the approved list of the White Fish Authority and Herring Industry Board. I emphasise that those bodies are

responsible for carrying out the day-today administration of the scheme. Obviously the Government have an interest in such matters, but they are, strictly speaking, the concern of the two statutory bodies which I have mentioned. I understand that this is a matter that has not raised particular problems for the statutory bodies. Of course, they have an obligation to satisfy themselves that the yards are on the approved list and that they are properly qualified to carry out the work.
My hon. Friend then raised the matter of the three-day working week and the effect which it was having. No particular problems have been notified to us. If my hon. Friend has any specific difficulty to raise, I shall be glad to hear from him and to consider it. The fishing side of the industry has not notified any such problem to us. If there is any specific problem or difficulty it might be more appropriate to raise it with the Department of Energy. That Department is responsible for the applications and administration and the restrictions on the use of energy in our present difficulties. I should be interested to hear of any such difficulties.
I hope that I have anwered all the points of detail which hon. Members have raised. I echo what my right hon. Friend said in opening, namely, that I believe that the scheme is welcomed by the industry and that it will help the industry in the proper provision of boats with which to carry out its job.

Question put and agreed to.

Resolved,
That the Sea Fish Industry Act 1970 (Relaxation of Time Limits) Order 1973, a copy of which was laid before this House on 19th December, be approved.

Resolved,
That the Fishing Vessels (Acquisition and Improvement) (Grants) (Amendment) Scheme 1973, a copy of which was laid before this House on 19th December, be approved.—[Mr. Anthony Stodart.]

ADJOURNMENT

Motion made, and Question proposed, That this House do now adjourn—[Mr. Hall-Davis.]

Orders of the Day — MILK PRODUCTION (LONDON ALLOWANCE)

2.42 a.m.

Mr. Ivor Stanbrook: The problem which I wish to raise is ancillary to the general problem of the dairy industry. I shall say a few words about that before referring to the specific injustice which I hope my hon. Friend will seek to redress.
The current level of costs in milk production is beginning to grow to catastrophic proportions. Feeding stuff costs have risen spectacularly. In Kent, increased costs for dairy farmers have averaged about 4·5p a gallon over the past 12 months. There is no longer a compensating factor in the price of cull cows and calves, which has fallen by more than half over the past six months. An EEC meeting provided for an increase of up to 1·6p a gallon, but it would seem a minimum price rise of 5p a gallon is needed now if the milk production industry, which is so vital as a primary source of nutrition for our people, is to be maintained.
There is likely to be a severe milk shortage next autumn because costs and prices in the dairy industry are matters of balance with other factors and other products. Many farmers are going out of milk production altogether. The Milk Marketing Board estimates that production next autumn will be down by 100,000 gallons a day because of a drop in insemination.
It is against that background that I raise the matter of the allowances which are paid to producer-retailers of milk in the London area. It may be surprising to some hon. Members, but not, I know, to my hon. Friend, who knows my constituency well, that there are still dairy farms within Greater London. Some of them are in my constituency, which I believe is the largest in Greater London and which incorporates a large slice of the green belt in South-East London.
Some of my local farmers are, or have been, producer-retailers of milk. Their comparatively small size makes it uneconomical for them to provide heat-treatment equipment, so that farm-bottled unpasteurised milk is their product.
According to the Milk Marketing Board, there were 5,815 producer-retailers

of milk in March 1973 in England and Wales, selling about 52 million gallons a year, which amounts to about 3½ per cent. of total liquid sales.
The Government encourage those who can afford to install heat-treatment equipment by paying each a heat-treatment allowance, which is now 0·83p a gallon of milk produced. No doubt that allowance is a useful and valuable addition to the income of the farmers concerned. All producer-retailers, whether or not they heat treat, enjoy a higher permitted maximum retail price of up to 1p.
Not every producer-retailer has a size of production or farm, or the finance, to enable him to provide heat treatment even if he wished. Several do not. In these days of sterilised and hygienic living, it is perhaps surprising how popular farm-bottled unpasteurised milk still is. One of my constituents, a Mr. Howie, of Holwood Farm, produces more than 300 gallons a day, most of which he sells to local people, including many who come to him from different parts of the South London area and have been coming to him for up to 20 years to collect non-heat-treated, farm-bottled milk regularly from his farm. One such customer collects 20 pints a week, once a week, and keeps it in his refrigerator, which just goes to show how fresh the milk is compared with standard milk. At the same time, Holwood Farm, through its roundsmen, supplies to local people each day about 500 gallons of bought-in pasteurised milk. It also supplies 120 dozen eggs daily.
There is no doubt, therefore, of the boon people like Mr. Howie in the London area are conferring upon hard-pressed Londoners. They should be encouraged and not penalised for the service they provide. But the heat-treatment allowance is not for them. It is not intended to be for producer-retailers who do not heat treat their milk. That may be fair enough.
There is also what is known as a London allowance, a concept that has been adopted in many spheres. It is designed to ease the general burden on those who live in the London area. It may be expressed as a form of cost-of-living allowance. It applies, for example, to civil servants, teachers and policemen. I understand that the general objective is to cover extra costs involving in living


and working in the special conditions of London.
So there is a London allowance for those farmers in the Metropolitan Police District who both produce and distribute milk by retail sales. That allowance was introduced in 1965 and at that time it was a farthing a gallon. Today it is no less than 1·2p per gallon—a rise of over 10 times since it was introduced—and that is supposed to take account of the rapid increase in costs which has occurred over that period for London producer-retailers. It is significant that only recently that allowance was raised from 0·8p per gallon with effect from 1st October 1971.
Here comes the injustice. For some reason—I suspect that it is probably sheer administrative convenience—the London allowance is paid only to those producer-retailers who heat treat their milk. In other words, producer-retailers in the London area who heat treat get an extra 2·03p per gallon of milk produced. They get a heat-treatment allowance of 0·83p and also the London allowance of 1·2p, making a total of 2·03 per gallon of milk produced. Those who do not heat treat their milk get nothing, whatever the extra burden of production and distribution costs which arise for them through their location in the London area.
It seems totally indefensible that when a heat-treatment allowance is assessed at 0·83p per gallon for the whole country an additional allowance for extra costs due to the location of the farm should be confined to those already getting a particular allowance for a particular purpose, and yet nothing is given to those in the same location who have to bear extra costs such as production and distribution costs through being in the London area.
It is also indefensible because the cost of heat treatment is nothing like the allowance which is paid. The Milk Marketing Board and the National Farmers' Union calculate that the average cost of heat treatment is no more than 0·5p per gallon, so it is much less than the heat treatment allowance. In Scotland, where producer-retailers account for about 20 per cent. of the market, the heat-treatment allowance paid is only 0·26p per gallon, so one wonders what

justification there is for the London heat-treatment allowance being more than 2p per gallon. As the heat-treatment allowance exceeds the cost of heat treatment, why is not the London allowance payable to all those producer-retailers who do London the service of producing the milk and have the burden of London costs to bear?
The recent increase in the London allowance must have been at least partly—I suggest, principally—due to the higher distributive costs in the London area. Therefore, leaving out those who are suffering from these extra costs because they do not heat treat their milk seems to be quite wrong. The distributive element within the London allowance might well be in excess of 1p. I ask my hon. Friend to seek to make that 1p available to all non-heat-treating producer-retailers.
I hope that my hon. Friend will not repeat the official explanation of the anomaly which has already been referred to me in correspondence, namely—and I quote not the exact wording but the gist of the explanation—that the London allowance is for London producer-retailers who heat treat and it would not be right to pay it to producer-retailers who do not. The facts of the matter challenge that explanation. If heat treatment costs justify a subsidy of 2.03p per gallon, let every heat-treatment producer have it. Do not mislead by calling part of it a London allowance. If, on the other hand, it is insisted that there should be a separate London allowance, we should not claim that it is all due to the extra cost of heat treatment in London, because we know that the extra cost of production and distribution in the London area must, as a matter of common sense, be a very significant proportion of the total extra costs.
The number of farmers concerned in this matter and the amount of money involved are minimal, but the injustice is great. I ask my hon. Friend to do something to remedy it.

2.58 a.m.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Peggy Fenner): My hon. Friend the Member for Orpington (Mr. Stanbrook) began by referring to the


general position of dairy farmers in this country at the present time. The Government fully recognise the problems that the unprecedented rise in the costs of feedingstuffs and other costs have caused the industry.
The Annual Review discussions are now well under way and we are doing all we can to announce the determination of guaranteed prices earlier than usual, and if possible by the end of February. As my hon. Friend will know, my right hon. Friend the Minister of Agriculture was speaking to farmers in Kent only last Friday, so he is well aware of the problems and feelings of Kent farmers on this subject.
My hon. Friend the Member for Orpington had written to us earlier on this subject and I welcome this opportunity to explain in more detail, hoping that I shall not repeat the arguments which he has been given in writing, the factors which we had had to take into account in considering his proposal that the special London allowance should be paid to producer-retailers in the Metropolitan Police District.
It might be useful if I first describe the general arrangements which apply to the trade as a whole and, in particular, the special arrangements introduced in October 1971 to help dairy firms in London.
The Government set the maximum retail price of milk. They also determine the average costs of processing and distribution on the basis of sample costings. The difference between the retail price and the costs of processing and distribution determine the price which the Milk Marketing Boards receive for the milk they deliver to dairies. This is the broad basis of the arrangements.
In addition, however, provision is made, as my hon. Friend pointed out, for certain allowances. The most important of these is the heat-treatment allowance paid to dairies. This has remained unchanged for many years at 0·83p per gallon. It covers the cost of pasteurisation and other forms of heat treatment of milk by the processing dairies, and the dairy trade regards it as an incentive for the heat treatment of milk.
I should perhaps mention that the costings arrangements were simplified in 1971 by the introduction of what has become

known as "the overall margin". In other words, the remuneration of the dairy trade since 1971 has been based on the average costs and profits of retail heat treaters. These are the integrated businesses—the processing dairies which carry out the whole operation of heat treating, bottling and retailing milk to the doorstep.
In 1971, special arrangements were also introduced for London. For a number of years there had been a small London allowance of 0·21p per gallon—an old halfpenny—paid on all milk heat treated in the London area. Even with this addition, however, the costings results for the London processing retailers for many years showed that their profits were unusually low compared with the average results over the country as a whole. When the margin adjustments which were designed to bring the average profit of the trade as a whole up to the agreed national target rate of profit had been made the profits of the London businesses were still well below the target.
To reduce this long-standing disparity between London and the rest of the country we introduced new arrangements which guaranteed London processing retailers 70 per cent. of the national target rate of profit. We do this by payment of a special London allowance—currently 1·2p per gallon—on all milk which is both heat treated and distributed within the London Metropolitan Police District.
This, then, is the background to our remuneration arrangements. How does all this affect the producer-retailer?
The Milk Marketing Board is responsible for ensuring that returns to producer-retailers, in their capacity as producers, are reasonable. The arrangements are based on the principle that as producers the producer-retailers should receive an appropriate producer price for milk and as retailers they should receive the distributive margin laid down by the Government. In fact, the producer-retailer enjoys certain advantages over the farmer who sells his milk wholesale to the Milk Marketing Board. His producer price, at 24·2p per gallon, is very close to the full guaranteed price and is thus about 3p per gallon more than the pool price received by other producers. In addition, he gets the current retail margin as determined from the costings. This combined entitlement


is deducted from the current retail price for pasteurised milk. The difference is paid to the board by the producer-retailer concerned in the form of a levy.
A producer-retailer who pasteurises his milk is, of course, also eligible for the heat-treatment allowance of ·83p per gallon. A producer-retailer who sells "untreated" or non-pasteurised milk does not get this, and we do not consider it appropriate that he should. It is also fair to make the point in this connection that the legal maximum retail price for untreated farm-bottled milk—the major proportion of milk sales by producer-retailers—is currently 6½p per pint, which is 1p per pint or 8p per gallon higher than the retail price or ordinary pasteurised milk. The levy paid by producer-retailers, however, is based on the price of pasteurised milk. The producer-retailer thus gets the full benefit of any premium for farm-bottled untreated milk.
My hon. Friend argues that the producer-retailer who is within the London Metropolitan Police District should be paid the special London allowance, or a proportion of it, even though he does not heat treat milk. I do not feel that this would be appropriate, for the following reasons.
As I have said, the level of the London allowance is based on the known costs and profits of London processing dairies which heat treat milk. Producer-retailers who sell untreated milk do not necessarily incur these high costs. The National Board for Prices and Incomes which looked at this whole question in 1967 was satisfied that the unusually high costs in London arose above all
in processing and distribution to town depots in London".
In setting a geographical area for the payment of the London allowance, we chose the Metropolitan Police District. This inevitably leads to some anomalies, particularly at the periphery of the area. The firms we are trying to help by these special arrangements are those carrying out complex processing and distributing

functions in difficult urban conditions involving the use of distributing depots. These operations cannot be fairly compared with those of a producer-retailer bottling and selling untreated milk locally from his own farm. After all, although I know that there are farms in my hon. Friend's constituency, there are not many farms in central London.
My hon. Friend referred to this allowance as if it were an allowance for farmers to cover the cost of production and distribution. It is, as I have made clear, an allowance for processing dairies rather than for farmers. As I have said, the producer-retailer selling untreated milk already enjoys the considerable advantage of being able to charge 1p per pint over the price of ordinary pasteurised milk.
It can be argued of course, as my hon. Friend does, that producer-retailers within the Metropolitan Police District who are not eligible for the London allowance because they do not heat treat milk should be paid a portion of this allowance reflecting the costs of distribution. But this would introduce fresh complications in an already rather complicated system which would be difficult to administer and which I do not feel would be justified. As I have said, the London allowance is based on the average costs and profits of heat treating retailers who both process and distribute milk within the London area.
There are firms which process milk outside the London area and distribute within it. There are firms which process milk inside the London area and distribute outside it, and so on. We have steadfastly, and to my mind rightly, turned our face against special London allowances in those specific cases.
For all these reasons, therefore, I am afraid that I can see no reason to alter the decisions which have already been taken about the eligibility of producer-retailers for the special London allowance.

Question put and agreed to.

Adjourned accordingly at eight minutes past Three o'clock a.m.